Overall spending down in June, but apparel and department stores show gains

NEW YORK Retail spending dropped 0.5% in June, the Commerce Department reported Wednesday. But much of the weakness came from a drop in auto sales and a decline in gasoline prices. Excluding autos and gasoline, sales would have risen 0.1% in June after having plunged 1% in May.

“Moderate growth these last few months proves that consumer uncertainty remains. A slow-growing economy and high unemployment rates will continue to hinder consumers’ decisions to spend on discretionary items,” said Jack Kleinhenz, chief economist at the National Retail Federation.

The June decline in retail sales was larger than the 0.2% fall that economists had expected.  The overall number was dragged down by a 2.3% plunge in auto sales, the biggest monthly drop since auto sales fell 2.5% in February.

Several retail categories, however, showed signs of strength in June. Department stores sales posted a 1.1% gain. General merchandise stores posted a 0.2% increase. Apparel sales rose 0.6% in June, and sales at appliance stores posted a 1.3% increase.

Among the retailers who had a rough time in June were hardware stores, where sales dropped 1%, and at furniture stores, which saw a decline of 1.1%.

“Today’s data shows consumers continue to take a cautious approach towards shopping,” said NRF president and CEO Matt Shay. “However, growth in key areas such as electronics, apparel and department stores is an encouraging sign as we enter the back-to-school shopping season.”