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Economy in Brief

U.S. Retail Sales Lower Due To Weakness in Autos & HousingĀ 
by Tom Moeller July 14, 2006

US retail sales fell 0.1% last month following an unrevised 0.1% up tick during May. It was the first m/m decline since February and it resulted in a 3.7% (AR) increase for 2Q after the 13.4% jump the prior quarter. Consensus expectations had been for a 0.4% increase in sales last month.

Nonauto retail sales increased an expected 0.3% but the rise during May was revised up to 0.7%. Nonauto retail spending grew 6.6% (AR) last quarter after an 11.4% rise during 1Q.

Lower sales by motor vehicle & parts dealers led last month's sales decline. A 1.4% drop (-3.5% y/y) was the third m/m decline this year despite a 1.3% rise in June unit auto sales to 16.30M.

Building material sales fell further in June. The 1.0% (+8.8% y/y) m/m decline was the third in a row and the fifth in the last seven months.

Sales at gasoline stations increased another 1.1% (20.4% y/y) even though retail gasoline prices fell 0.8% m/m during June to an average of $2.89 per gallon. Gas prices have since jumped to $2.97.

Less gasoline, nonauto retail sales rose 0.1% (7.0% y/y) after a 0.6% May increase that was double the rise estimated initially. During 2Q, nonauto retail sales less gasoline increased 3.3% (AR) after a 12.2% spurt during 1Q.

Sales of discretionary items were firm last month. Sales of furniture, electronics & appliances increased 0.4% (6.8% y/y) after a 0.3% gain during May which was initially estimated as a 0.1% decline. General merchandise stores rose 0.3% (4.6% y/y) after an unrevised like gain during May and apparel store sales also rose 0.3% (4.9% y/y) though the prior month's increase was doubled to 0.4%. Sales of nonstore retailers (internet & catalogue) slipped 0.3% (12.3% y/y) after an upwardly revised 3.0% May spike.

  June May Y/Y 2005 2004 2003
Retail Sales & Food Services -0.1% 0.1% 5.9% 7.2% 6.2% 4.2%
  Excluding Autos 0.3% 0.7% 8.5% 8.2% 7.2% 4.7%
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