Sales at U.S. retailers stagnated in June as rising unemployment held consumers back.
The 0.1 percent increase reported by the Commerce Department in Washington today compared with the median forecast of a 0.1 percent drop in the Bloomberg News survey of 80 economists. Excluding auto sales, purchases were little changed, the weakest performance since July 2010.
Total sales were boosted by an unexpected increase in demand at auto dealers that will not influence figures on consumer spending for the second quarter that the government will publish later this month. Increasing joblessness prompted stores like Target Corp. and Gap Inc. to sweeten discounts to lure customers as a dearth of jobs raises the risk that household purchases will have difficulty picking up for the rest of 2011.
“Consumers are overwhelmed by their loss of purchasing power,” Julia Coronado, chief economist for North America at BNP Paribas in New York, said before the report. “Consumers aren’t panicking but they’re not feeling buoyant or bullish by any stretch.”
Economists’ estimates ranged from a decline of 0.7 percent to a gain of 0.5 percent. The unchanged reading in non-auto sales matched the survey median.
Six of 13 major categories showed a decline in sales last month, led by a 1.3 percent drop at gasoline stations and 0.8 percent decrease at furniture stores.
In addition to auto dealers, gains were led by department and building material merchants.
Auto sales showed a 0.8 percent increase, running counter to industry data that is used to calculate gross domestic product.
Sales of cars and light vehicle ran at a seasonally adjusted 11.41 million annual rate in June, down from 11.76 million in May and 13.14 million in April, according to researcher Autodata Corp. Toyota Motor Corp. (7203) and Honda Motor Co. deliveries each fell 21 percent from the same month last year, reflecting supply-chain constraints linked to Japan’s March earthquake, while General Motors Co. (GM) and Ford Motor Co. (F) said sales rose 10 percent.
“The Japan crisis in and of itself was contributing to the slowdown, and that’s starting to be behind us,” GM’s vice president for U.S. sales Donald Johnson said on a July 1 teleconference. “While we’ve had these couple of bumps, we believe that the recovery will be back on track.”
Excluding autos, gasoline and building materials, which are the figures used to calculate GDP, sales rose 0.1 percent, the smallest gain this year.
Discounts to clear inventory ahead of the back-to-school season helped June sales at chain stores beat analysts’ estimates. Target Corp. (TGT), the second-largest U.S. discount retailer, posted a 4.5 percent increase from a year earlier, while demand at Gap Inc. rose 1 percent, beating projections for a drop, the stores reported last week.
Payrolls grew by 18,000 last month, the smallest gain since September, the Labor Department reported July 8. The jobless rate climbed for a third straight month, rising to 9.2 percent, the highest level this year.
Federal Reserve Chairman Ben S. Bernanke told Congress yesterday the central bank is prepared to take additional action, including buying more government bonds, should the economy be in danger of stalling.
“The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support,” Bernanke said in prepared testimony before the House Financial Services Committee in Washington.
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