Retail Sales Hold their Own in July

-- JCK-Jewelers Circular Keystone, 8/13/2008 1:51:00 PM

Retail industry sales for July (which exclude automobiles, gas stations, and restaurants) increased 0.3 percent seasonally adjusted month-to-month and rose 4.7 percent unadjusted over last year, according to the National Retail Federation.

July retail sales released today by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) decreased 0.1 percent seasonally adjusted from the previous month but increased 4.5 percent unadjusted year-over-year. June retail sales were also revised up to a 0.3 percent increase from May, after the Commerce Department initially said June sales rose only 0.1 percent.

“While discounters were the biggest beneficiaries of rebate checks, consumers were still spreading the wealth among other retailers,” said NRF chief economist Rosalind Wells. “Because most of the rebate checks have already been distributed, retailers will face increased challenges generating sales in the months ahead.”

Most retail categories enjoyed strong gains in July, NRF said. General merchandise retailers, including discounters, sales increased 0.3 percent seasonally adjusted from June and rose a spectacular 6.4 percent over July 2007. Health and personal care stores’ sales were flat from the prior month, but saw an increase of 4.4 percent unadjusted year-over-year.

Clothing and clothing accessories stores sales increased 0.2 percent seasonally adjusted from last month and climbed 3.1 percent unadjusted, year-over-year, NRF said. Electronics and appliance stores also saw solid growth with sales increasing 0.8 percent seasonally adjusted from June and 5.9 percent unadjusted over the same period a year ago.

Meanwhile, Nigel Gault, chief U.S. Economist, Global Insight, in reacting to the commerce department’s figures said that adjusted for inflation, “Consumer spending probably fell in July for the second consecutive month.”

“The July retail sales report was much as expected,” Gault said. “Plunging vehicle sales dragged down the headline figure, and the rise in ex-autos spending will have been eaten up by higher food and gasoline prices.

“Fortunately, gasoline prices have fallen since July which is giving the consumer some relief,” he added. “But the consumer is still under enormous pressure as employment is declining, real wages are down, housing and stock market wealth are down, and credit conditions continue to tighten. And the surge of stimulus payments is now over. 

“Consumer spending fell in inflation-adjusted terms in June, and will probably fall again in July. For the third quarter overall, we expect a small inflation-adjusted increase in spending of about 0.5 percent,” he continued. “But there is a growing risk that the third quarter will see the first outright decline in consumer spending since the end of 1991.”