Retail sales rise 0.4 percent in June on auto purchases

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WASHINGTON (AP) — Americans spent more at retail businesses in June, buying more cars, furniture and clothes. The gain shows that consumers continue to drive 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. The June gain was largely because of a 1.8 percent increase in auto sales, the biggest since November. Higher gas prices also pushed service station sales up 0.7 percent.

Excluding the volatile categories of autos, gas and building supplies, so-called core retail sales rose just 0.15 percent, the weakest since January. Economists pay attention to this category because its components are used to calculate overall economic growth.

Spending at retailers has helped drive job growth this year and has shown that consumers remain resilient despite higher taxes. The retail sales report is closely watched because it’s the government’s first report each month on the health of consumer spending, which accounts for 70 percent of economic activity.

Furniture sales jumped 2.4 percent last month, a sign that the housing recovery may be encouraging more home remodeling. Sales also rose at clothing stores and general merchandise stores, which include Target and Wal-Mart.

But department store sales fell 1 percent. And sales at home improvement stores, such as Home Depot, dropped 2.2 percent — although those sales are up nearly 10 percent in the past year.

Monday’s government report comes after some retail chains reported their strongest sales gains since January. Revenue at stores opened at least a year rose 4.1 percent in June compared with the same month a year ago, according to a preliminary tally of 13 retailers by the International Council of Shopping Centers.

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. And the outlook for the rest of 2013 is just as strong. Wider credit availability and hot-selling new vehicles are helping to boost sales. Demand for big pickups has been a key factor in higher sales.

June is typically when stores clear out summer merchandise to make room for fall goods. Brisk sales mean that stores probably won’t be stuck with piles of summer clothes that need to be cleared as back-to-school sales kick off in late July.

Retail stores are benefiting from more hiring, which gives more people money to spend. Employers added 195,000 jobs in June. Job gains have averaged 202,000 for the past six months, up from 180,000 for the previous six months.

Overall economic growth isn’t strong as the job market would suggest. The economy grew at a weak annual rate of 1.8 percent in the January-March quarter. Many analysts think growth may have slowed to around a 1 percent annual rate or even less in the April-June quarter.

But 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.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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