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Retail Sales Rise by Largest Amount Since January

Retail sales advanced in June by 0.6 percent, the largest amount since January, led by a surge in gasoline prices and a slight rebound in the battered auto sector.

AP
Tuesday, July 14, 2009


WASHINGTON -- Retail sales advanced in June by the largest amount in five months, led by a surge in gasoline prices and a slight rebound in the battered auto sector.

The Commerce Department said Tuesday that retail sales rose 0.6 percent last month, better than the 0.4 percent gain that economists had expected. It marked the second consecutive increase and boosted hopes that the economy may be on the verge of a rebound.

While much of the strength came from a price-driven surge at gasoline stations, there was also strength in a number of other areas, including the best showing at auto dealerships since January.

The hope is that the battered consumer, bolstered by tax cuts including in the $787 billion economic stimulus bill, will resume spending in coming months and this will help end a painful recession that is already the longest in post World War II history.

In June, sales of autos and auto parts jumped by 2.3 percent, the best showing since January. However, even with the gain, auto sales are 14.5 percent below the level of a year ago, underscoring the troubles in the industry.

Excluding autos, retail sales rose by 0.3 percent in June, lower than the 0.5 percent rise that economists had expected.

Much of the strength outside of autos reflected the big jump in gasoline prices during the month, a rise that pushed sales at gasoline stations up by 5 percent, after a similarly big jump in May. Excluding gasoline, retail sales would have risen by 0.3 percent last month, just half the overall gain. Sales also showed strength and electronics and appliance stores and at sporting goods stores.

Sales at general merchandise stores, the category that includes nationwide department store chains and giant retail chains such as Wal-Mart Stores Inc., fell by 0.4 percent following an even bigger 1.7 percent decline in May. Sales at specialty clothing stores were flat last month.

This dismal showing reflected a report last week showing lackluster chain store sales. Consumers appeared to be shopping for necessities and seeking discounts, buoying discounters but punishing brands like Abercrombie & Fitch. That chain's same-store sales fell 32 percent in June, more than expected. American Eagle Outfitters Inc. reported a drop of 11 percent.

Financial and employment worries have discouraged shoppers. The nation's jobless rate jumped to a 26-year high of 9.5 percent in June.

Consumer confidence, as measured by the Conference Board, dropped in June, reversing a three-month upward trend fueled by a stock market rally that also is fizzling a bit.

Many economists, however, believe that the economy is in the process of stabilizing after a steep nosedive at the end of last year and first three months of this year. Many are forecasting that the overall economy, as measured by the gross domestic product, will begin growing again this July-September quarter.


Retailers cut 21,000 jobs in June


NEW YORK (AP) — Retail job cuts moderated in June, when U.S. merchants trimmed 21,000 as they kept shuttering stores, but weakness in the overall job market looms over retailers, who need consumers to spend more freely.

June was the 17th straight month that retailers cut jobs, but they trimmed much less than their 12-month industry average of 50,000, according to Sophia Koropeckyj, managing director of Moody's Economy.com, a division of Moody's Analytics.

Retail, among the sectors most sensitive to the consumer spending slowdown, was one of the first to slash jobs, accounting for as much as 25 percent of all jobs lost at the worst point late last year. But that share has been declining.

Retailers employ about 11.2 percent of all American workers. Year-to-date, retail job losses accounted for about 7 percent of the overall jobs lost.

But Koropeckyj said the industry is "not out of the woods because the employment situation is deteriorating." Employees in all industries are working fewer hours or have had to take pay cuts, she noted, and those trends could have big implications for stores, which need shoppers to open their wallets.

Employers overall cut a larger-than-projected 467,000 jobs in June, pushing the unemployment rate up to a 26-year high of 9.5 percent, indicating that an economic recovery will be rocky.

Koropeckyj expects employers to keep slashing jobs through at least mid 2010, and she predicts the jobless rate will exceed 10 percent by early next year.

June's overall payroll reduction was higher than the 363,000 drop economists expected, but the rise in unemployment — from 9.4 percent in May — wasn't as sharp as the expected.

In the retailing sector, motor vehicle and parts dealers shed the most jobs, losing 10,500. Auto dealers cut 8,900, while building material and garden supply stores shed 4,100, furniture and home furnishings stores lost 2,100; and clothing and accessories stores lost 2,300.

Among the positive signs Koropeckyj sees is that some retail sectors added significant numbers of jobs. Food and beverage stores added 1,500, while health and personal-care retailers added 1,200.