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Economy in Brief

U.S. Retail Sales Post Surprising, Across-the-Board Declines
by Tom Moeller August 13, 2009

Price discounting apparently wasn't enough last month to entice consumers to open their wallets and spend. July retail sales slipped 0.1% after an upwardly revised 0.8% June increase that was fueled by higher gasoline prices. The July decline in total sales fell well short of expectations for a 0.6% increase. The retail sales data are available in Haver's USECON database.

The "Cash-For-Clunkers" auto sales program was successful in lifting sales of motor vehicles by 2.4% (-7.3% y/y) in dollar terms as unit vehicle sales jumped 15.8% m/m. Without the auto sector, retail sales fell 0.6%.

Elsewhere, gas prices reversed just a piece of earlier increases with a 4.0% (NSA) decline to $2.53 per gallon. As a result, sales of gasoline service stations fell 2.1% after a 6.3% jump during June.

Distortion of the underlying retail spending picture is an obvious result of auto & gasoline sales, but the basic trend is not vibrant. Retail sales excluding both autos and gasoline fell 0.4% (-4.6% y/y) last month for the fifth consecutive monthly decline. Including a strong January, these sales have risen at just a 0.2% annual rate since December following last year's 2.8% 12-month decline.

Discretionary spending continued under pressure as the job market remained depressed. Sales at furniture, electronics & appliance stores fell 1.2% (-13.8% y/y) for the fifth consecutive monthly drop. Earlier small monthly gains were revised away. Furniture store sales alone fell 0.9% (-12.9% y/y) while sales of electronics & appliances dropped 1.4% (-14.6% y/y). So far this year, these hard good sales have fallen at a 7.8% annual rate after last year's 4.4% decline. In the soft goods area, apparel store sales increased a slight 0.6% (-7.6% y/y) while sales at general merchandise stores fell 0.8% for the fifth consecutive monthly decline (-4.7% y/y).

Internet and catalogue purchases inched up after a firm June. July sales of non-store retailers rose 0.1% (-5.2% y/y) following an upwardly revised 1.5% jump during June. So far this year sales have risen at a 3.2% rate after rising 2.8% in 2008. Finally, restaurant sales made up their June decline with a 0.4% increase. So far this year they've risen a a 4.0% annual rate.

Building materials sales continued their slump, falling 2.1% last month for the sixth monthly decline this year and they were down at a 9.1% annual rate since December.

Bank Credit Standards from the Federal Reserve Bank of Philadelphia can be found here.

  July June May Y/Y 2008 2007 2006
Retail Sales & Food Services (%) -0.1 0.8 0.5 -8.3 -0.7 3.3 5.3
  Excluding Autos -0.6 0.5 0.2 -8.5 2.5 3.9 6.3
    Less Gasoline -0.4 -0.1 -0.2 -4.6 1.6 3.6 5.7
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