Apparel, Accessories Sales a Bright Spot in June Sales

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Washington—American shoppers may have held off spending last month on big ticket purchases like cars, furniture and building materials, but sales at clothing and accessories stores were up 2.0% (up 3.5% from June 2011), a bright spot among retail categories.

In its monthly report, the U.S. Commerce Department reported today that total June sales slipped 0.5%, marking the third consecutive month of declines.

Total sales amounted to $401.52 billion, a 0.5% decline when economists’ average estimate expected a 0.2% increase. While the news was disappointing across many retail sectors, the total was still 3.8% higher than June 2011.

Core retail sales, which exclude automobiles, gasoline and restaurants, decreased 0.4% seasonally adjusted from May but increased 1.7% unadjusted year-over-year. Other retail categories posting increases besides clothing and accessories stores, nonstore retailers (including Internet) had a 0.5% increase and other miscellaneous retailers had a 0.5% increase.

But sporting goods, electronics, general and department store retailers all posted declines.

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And while gasoline prices fell again last month, consumers have been particular about where they are spending their dollars.

“The consumer is obviously struggling, not benefiting much from weak gasoline prices,” said David Sloan, an economist at 4cast.

“Weak economic numbers over the past few weeks have increased anxiety about the future direction of the economy,” Jack Kleinhenz, NRF chief economist. “Today’s data is discouraging but not demoralizing. If you look at the first half of the year overall, retail sales actually increased 4.6% year-over-year, indicating that the economy is improving but maybe not quick enough to impact consumer spending and job growth.”

However, economists who looked at the overall picture of the U.S. economy, where consumer spending accounts for about 70% of the total, noted that retail sales haven’t fallen for three straight months since 2008 at the start of the Great Recession.

“However hard you look, there’s just no good news in this report at all,” said Paul Ashworth, chief U.S. economist at Capital Economics.

Ashworth estimated that overall economic growth has slowed to an annual rate of about 1.5% in the second quarter, down from a 1.9% rate in the January to March first quarter.

“High unemployment, persistent global economic headwinds and heightened uncertainty continue to undermine consumer confidence,” said President Sandy Kennedy, president of Retail Industry Leaders Association (RILA).

“While leading retailers have successfully risen above these circumstances and continue to remain strong, the ongoing challenges remain great. Washington can help by enacting policies that will give clarity and certainty to businesses, freeing them up to invest and grow,” Kennedy said.