June retail sales rise 0.6% led by surge in gas prices

Washington, D.C. 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% last month, better than the 0.4% 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%, the best showing since January. However, even with the gain, auto sales are 14.5% below the level of a year ago, underscoring the troubles in the industry.

Excluding autos, retail sales rose by 0.3% in June, lower than the 0.5% 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% after a similarly large jump in May. Excluding gasoline, retail sales would have risen by 0.3% last month, just half the overall gain.

Sales also showed strength at electronics and appliance stores and at sporting goods stores.

Sales at general merchandise stores, the category that includes nationwide department store chains and such giant retail chains as Wal-Mart Stores, fell by 0.4% following an even bigger 1.7% 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 such as Abercrombie & Fitch.

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.