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Retail sales rise 0.4 percent in June on autos

By Martin Crutsinger
Associated Press

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WASHINGTON: Americans spent more at retail businesses in June, buying more cars and trucks, furniture and clothes. But consumers cut back on many other purchases, a mixed sign for economic growth.

The Commerce Department said Monday that retail sales rose 0.4 percent in June from May, after a 0.5 percent increase the previous month.

Sales rose in June largely because of a 1.8 percent increase in auto purchases, the biggest since November. Higher gas prices also pushed service station sales up 0.7 percent.

Still, excluding the volatile categories of autos, gas and building supplies, so-called core retail sales rose just 0.15 percent. That’s the weakest since January.

Americans spent less at department stores and restaurants in June. They bought fewer computers and electronics. And sales at home improvement stores, such as Home Depot, dropped 2.2 percent — although those sales are up nearly 10 percent over the past year.

Economists pay close attention to core sales because its components are used to calculate overall economic growth. Many said the report shows overall consumer spending has slowed from the start of the year. That should keep economic growth in the April-June quarter at or below an annual rate of 1 percent, they said, down from a subpar 1.8 percent rate in the January-March quarter.

“It is disconcerting that retail sales growth lost more momentum as the second quarter progressed,” said Paul Dales, senior U.S. economist at Capital Economics.

There were some encouraging signs. Americans continued to buy cars and trucks. Furniture sales jumped 2.4 percent last month, a sign that the housing recovery may be encouraging more home remodeling. And sales rose at general merchandise stores, which include Target and Wal-Mart.

Analysts expect a modest rebound in the second half of the year. The economy is expected to grow at a roughly 2.5 percent annual rate as the effects of federal tax hikes and government spending cuts begin to fade. The strongest part of the retail economy has been auto sales. Over the past year, car and truck sales are up 11.4 percent, according to the government’s data.

Earlier this month the nation’s automakers also reported robust sales in June. Sales totaled 7.8 million from January through June, the best first half since 2007.


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