Retail sales reveal consumers still cautious about spending

Retail sales reveal consumers still cautious about spending

Retail sales rose a slight 0.2 percent in June, disappointing some analysts who had predicted a more robust performance and evidence that consumers remain cautious in their spending.

Tuesday’s monthly retail-sales report from the Commerce Department showed U.S. sales declines at auto dealerships, building- and garden-supply stores and restaurants, suggesting Americans are still reluctant to spend freely. While employers have stepped up hiring since January, wage growth remains weak and is barely keeping up with inflation.

Still, economists were encouraged by some of the details in the report. A measure of retail sales that excludes up-and-down categories such as gasoline and autos rose at a solid 0.6 percent clip. Sporting goods stores and department stores recorded sales gains, and sales at “non-store retailers” — primarily online sellers — rose 0.9 percent.

“While the headline number for June was disappointing, there were some underlying pockets of strength,” Jim Baird, chief investment officer for Plante Moran Financial Advisors, said. “The solid advance … across numerous retail sectors suggests that consumers are spending, but doing so selectively.”

Kendall Goodrich, chairman of the marketing department at Wright State University, said the solid 0.6 percent increase in “core” sales is a positive sign, as is the general merchandise sales increase, up 1.1 percent over the previous month and up 3.4 percent over June 2013.

“With online sales growing at a stronger rate than other categories, that makes the increase in general merchandise sales more comforting,” Goodrich said. “We’ll have to see whether that trend is temporary, but it looks like consumers are opening their pocketbooks a bit more, and that could be good news for local retailers.”

Clothing-store sales also were a bright spot, rising 0.8 percent. Tracey Schumann, owner of Get Dressed clothing boutique at 2501 Far Hills Ave. in Oakwood, said her store’s sales mirrored the national sales performance.

“We were up a little bit in June compared to last year,” Schumann said. “I’m pleased with that, because we have a lot of competition out there” from both online shopping sites and bricks-and-mortar stores.

Schumann credited an expanded social-media presence with helping to boost sales. “We are consistently keeping people informed about what’s going on in the store,” she said.

Economists found an additional source of optimism in the revisions made by the commerce department to previous months’ sales reports: Retail sales were revised higher in May to 0.5 percent from 0.3 percent, and in April to 0.6 percent from 0.5 percent.

Most analysts now expect the economy will expand at about a 3 percent pace in the April-June quarter, a forecast that was little changed by the retail sales report. That’s not as strong a rebound as many economists had hoped from a weak first quarter, when the economy shrank 2.9 percent, mostly attributable to a harsh winter.

Serdar Durmusoglu, associate professor of marketing at the University of Dayton, said there are ample signs in the monthly report that consumers are still hesitant to spend money on large purchases.

“It appears to show that people don’t have a lot of confidence yet,” Durmusoglu said. “They’re still cautious about the economy, so they’re just making seasonal purchases.”

A 1 percent drop in sales of building materials and garden equipment suggests consumers are delaying their summer home-improvement projects, the UD faculty member said.

Rising grocery prices also may have squeezed household budgets. Still, employers are hiring at a healthy pace, which may soon give Americans more confidence to spend. Employers have added an average of 230,000 jobs a month in the first half of this year, up from 194,000 a month in 2013. That’s knocked the unemployment rate down to 6.1 percent, the lowest in nearly six years.


The Associated Press contributed to this report.