WASHINGTON: Sales at US retailers unexpectedly fell in July, the first decline in three months, as concern over jobs and stagnant incomes caused consumers to cut back on other items after taking advantage of the cash-for-clunkers program.
The 0.1 percent decrease followed a revised 0.8 percent gain in June that was larger than previously estimated, Commerce Department figures showed yesterday in Washington. Purchases excluding automobiles fell 0.6 percent, also more than anticipated.
Retailers such as Macy's Inc are cutting costs and inventories to bolster profits as job losses and falling home values prompt Americans to cut back on non- essential items.
"Consumers continued to maintain a tight hold on their wallets, worried about rising unemployment, falling home prices, and tight credit," Steven Wood, president of Insight Economics LLC in Danville, California, said before the report. "Overall economic activity will not fully revive until consumer spending rebounds."
Retail sales were projected to rise 0.8 percent after an initially reported 0.6 percent gain in June, according to the median estimate of 76 economists in a Bloomberg News survey. Forecasts ranged from a decline of 0.9 percent to a gain of 2 percent.
Automobile sales firm
Excluding automobiles, the drop in sales was the biggest since March. They were forecast to increase 0.1 percent, according to the survey median.
Americans cut back on furniture, electronics, building materials, groceries and sporting goods in July, according to the report. The drop in sales at department stores, at 1.6 percent, was the biggest this year.
A drop in prices probably also contributed to a decline in revenue at service stations. Filling station sales decreased 2.1 percent. Regular unleaded gasoline averaged $2.53 a gallon at the pump in July, down 11 cents from the prior month, according to AAA.
Excluding gasoline, retail sales rose 0.1 percent following a 0.3 percent gain.
The government's cash-for-clunkers plan did boost auto sales, confirming industry data released earlier this month. Purchases at dealerships and parts stores climbed 2.4 percent last month, the biggest gain since January.
Industry data showed sales of cars and light trucks rose to an 11.2 million annual unit pace in July, the highest since September, after the government offered credits of up to $4,500 to trade in gas-guzzlers for more fuel-efficient vehicles.
President Barack Obama last week signed into law an emergency measure giving an additional $2 billion to the cash-for-clunkers program after the original $1 billion ran out three months earlier than projected. The infusion of funds was intended to extend the program through August.
Excluding autos, gasoline and building materials - the retail group the government uses to calculate gross domestic product figures for consumer spending - sales dropped 0.2 percent after no change in June. The government uses data from other sources to calculate the contribution from the three categories excluded.
Macy's, the second-biggest US department store chain, said yesterday it cut inventories 7.5 percent in the second quarter from a year ago as sales dropped.
Karen Hoguet, chief financial officer at the Cincinnati-based company, said on a conference call that Macy's is "cautiously optimistic" its sales trends will improve.