US retail sales in sluggish start to quarter

PUBLISHED : Thursday, 14 August, 2014, 1:28am
UPDATED : Wednesday, 20 August, 2014, 10:18pm

Retail sales in the United States were little changed last month, the worst performance in six months, as car demand slowed and tepid wage growth restrained consumers.

The slowdown in purchases followed a 0.2 per cent advance in June, the Department of Commerce said. Excluding cars, sales rose 0.1 per cent.

Job growth has yet to stoke the type of wage gains needed to boost household purchases, a sign the economic expansion will probably not sustain the second-quarter pickup into the end of the year.

Some retailers must rely on promotions and discounts to entice customers, whose spending accounts for about 70 per cent of the economy.

"We're seeing decent but not great consumer spending," said Christopher Low, the chief economist at FTN Financial. "Credit is limited and wage growth is stagnant."

Eight of 13 major categories showed an increase in sales last month, paced by clothing, grocery and personal-care stores, the report showed.

The labour market, while improving, has yet to return to full strength. Job openings rose in June to the highest level in more than 13 years, the Department of Labour said. Employers have added more than 200,000 jobs in each of the past six months, the best performance since 1997.

Nonetheless, inflation-adjusted average weekly earnings dropped 0.2 per cent in the 12 months to June, the worst performance since October 2012, according to labour department data.

Among retailers, car dealers benefited from pent-up demand and easy access to credit, with car and truck sales up 6 per cent from a year ago, commerce department data showed.

Core retail sales, which excludes categories such as cars, petrol stations and building materials, climbed 0.1 per cent last month following a 0.5 per cent increase in June that was smaller than previously reported.

Core sales are used to calculate gross domestic product.

The world's largest economy grew at a 4 per cent annualised rate in the second quarter after contracting 2.1 per cent in the first three months of the year, its worst performance since 2009, during the final stages of the recession.