Commerce Department: June Sales Flat

Washington—In what has been called the “poorest performance” since July 2010, total sales at U.S. retailers rose only 0.1% to $387.79 billion in June, the U.S. Department of Commerce reported today.

The small rise was attributed to better automobile sales and the biggest drop in gasoline receipts in a year. The small June increase followed May’s 0.1% decline, which was revised up from an originally estimated 0.2% decrease.

Economists had expected sales to slip 0.1% to 0.2%. Retail sales excluding gasoline, however, rebounded 0.3% after declining 0.2% in May, mostly due to car sales.

Apparel and Accessories Sales Edge Up Though

Excluding auto sales, retail sales were essentially flat in June.

Nonetheless, confirming comparable store sales reports that major retailers issued earlier this month, many fashion categories saw sales increases. Apparel and accessories sales rose 0.7% in June compared to a 0.2% increase in May. Compared to June 2010 though, apparel and accessories sales last month were up 6.5%.

According to the Commerce Department, general merchandise retailers had a 0.4% increase and Internet retailers had a 0.3% increase. Department stores saw their sales increase 1.4%, the largest among the retailers in the Commerce Department’s report. Sporting goods, hobby, book music, electronics and furniture retailers all posted sales declines.

‘Soft Patch’

Wholesale prices fell more than forecast in June on lower energy costs, the Labor Department said. And as Americans continued to content with declining home values and an unemployment rate seemingly stuck above 9%, retailers may be increasing promotions to entice consumers this summer.

“The soft patch is likely to linger for a few more months,” said Mark Vitner, senior economist at Wells Fargo Securities LLC. “Even with the drop in energy prices we’ve seen recently, consumers’ purchasing power is still being stretched. Businesses are incredibly cautious about hiring workers right now.”

Since consumer spending accounts for about 70% of the U.S. economy, the retail sales reports over the past two months are troubling, some economists noted.

Federal Reserve Chairman Ben Bernanke told Congress Wednesday economic growth so far in 2011 has been modest and that the pace is likely to remain moderate.

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