US retail sales fall
Sunday, 15 July 2007
WASHINGTON, July 14 (AFP): US retail sales-a crucial driver of economic growth-fell by the biggest margin in almost two years in June as American consumers cut their spending amid a persistent housing slump, the government said yesterday.
The Commerce Department's monthly report showed that June retail sales declined an unexpected 0.9 per cent, defying most economists' predictions that sales would remain unchanged.
Stripping out vehicle sales from the June report, retail sales dropped 0.4 per cent. Most analysts had expected sales excluding autos to rise 0.2 per cent.
The Dow Jones Industrial Average stock barometer fell in the wake of the report's release, but then rebounded to close at a record high just over 13,900 points, partly as investors cheered a better than expected survey on consumer sentiment.
The surprise decline in retail sales, the sharpest since August 2005, is likely to disappoint the Federal Reserve which is banking on improved economic performance after US growth slowed to 0.7 per cent in the first three months of 2007.
Wall Street follows retail sales closely because consumer spending accounts for some two-thirds of all US economic growth.
A sustained decline in retail sales and consumer activity could dent growth in the world's biggest economy going forward.
The Fed has kept its key short-term fed funds interest rate anchored at 5.25 per cent for a year as it focused on warding off inflationary pressures.
May's retail sales were revised to reflect a slightly improved picture, however, as the government said it had lifted that month's retail sales to a rise of 1.5 per cent from an original estimate of 1.4 per cent.
But analysts said American consumers clearly lost some of their spending appetite last month.
The latest retail sales snapshot revealed that vehicle and part sales across the country fell 2.9 per cent in June after rising 1.1 per cent in May.
The declines across other industries were also fairly broad- based, including some sectors that traditionally benefit from warmer summer temperatures.
Service station sales fell 1.1 per cent last month, amid strong spikes in gasoline costs, after rising 4.1 per cent in the prior month.
Building materials and garden equipment companies saw their sales drop 2.3 per cent compared with a 4.7 per cent gain in May.
Clothing store sales tumbled 1.4 per cent after rising 2.5 per cent in May while restaurant and cafe turnover managed only a slim 0.1 per cent gain in June following a 0.6 per cent rise in the prior month.
The Commerce Department's monthly report showed that June retail sales declined an unexpected 0.9 per cent, defying most economists' predictions that sales would remain unchanged.
Stripping out vehicle sales from the June report, retail sales dropped 0.4 per cent. Most analysts had expected sales excluding autos to rise 0.2 per cent.
The Dow Jones Industrial Average stock barometer fell in the wake of the report's release, but then rebounded to close at a record high just over 13,900 points, partly as investors cheered a better than expected survey on consumer sentiment.
The surprise decline in retail sales, the sharpest since August 2005, is likely to disappoint the Federal Reserve which is banking on improved economic performance after US growth slowed to 0.7 per cent in the first three months of 2007.
Wall Street follows retail sales closely because consumer spending accounts for some two-thirds of all US economic growth.
A sustained decline in retail sales and consumer activity could dent growth in the world's biggest economy going forward.
The Fed has kept its key short-term fed funds interest rate anchored at 5.25 per cent for a year as it focused on warding off inflationary pressures.
May's retail sales were revised to reflect a slightly improved picture, however, as the government said it had lifted that month's retail sales to a rise of 1.5 per cent from an original estimate of 1.4 per cent.
But analysts said American consumers clearly lost some of their spending appetite last month.
The latest retail sales snapshot revealed that vehicle and part sales across the country fell 2.9 per cent in June after rising 1.1 per cent in May.
The declines across other industries were also fairly broad- based, including some sectors that traditionally benefit from warmer summer temperatures.
Service station sales fell 1.1 per cent last month, amid strong spikes in gasoline costs, after rising 4.1 per cent in the prior month.
Building materials and garden equipment companies saw their sales drop 2.3 per cent compared with a 4.7 per cent gain in May.
Clothing store sales tumbled 1.4 per cent after rising 2.5 per cent in May while restaurant and cafe turnover managed only a slim 0.1 per cent gain in June following a 0.6 per cent rise in the prior month.