RTTNews - Retail sales unexpectedly fell last month. The government's cash for clunkers program gave a boost to auto sales, but many other sectors saw declines.
The figures point to continued weakness among consumers, who continue to hold back in the face of an uncertain economic environment.
The U.S. Commerce Department said retail sales fell 0.1 percent in July. This followed a 0.8 percent increase in the previous month. .
Economists had expected the figure to rise 0.8 percent.
Auto sales, which were expected to receive a boost from the government's popular cash for clunkers program, advanced by 2.4 percent, according to the government's figures. This followed a 1.9 percent increase the previous month.
Excluding the auto sector, retail sales were down by 0.6 percent. Economists were looking for a 0.1 percent rise excluding autos.
The consumer is clearly far from out of the woods, noted Peter Boockvar, equity strategist at Miller Tabak + Co.
He suggested that the cash for clunkers program may have diverted money from other sectors into auto purchases.
Christoph Balz, analyst for Commerz Bank, agreed that the figures did not bode well for the average shopper, saying the new data pointed to a stagnant consumer.
While we expect strong US GDP growth in the second half of 2009, the consumer will contribute rather little to this, Balz said.
July saw sales declines for furniture, electronics, building materials, food and beverages, sporting goods and department stories. This was partially offset by more spending on restaurant and bars, online retailing and clothing.
The electronics segment suffered a 1.4 percent slide, with sales down 14 percent from last year. Furniture sales dipped 0.9 percent from the previous month, sporting goods fell 1.9 percent, building materials declined 2.1 percent and department store sales dropped 1.6 percent.
Lindsey Piegza, economic analyst for FTN Financial, explained that consumers continue to deleverage from the mountains of debt they built up over the past two-decades.
Noting that long-term, beating back this debt will mean more sustainable consumption, Piegza noted that in the short-run consumer weakness is the most substantial barrier to the sustainability of the recovery as we head into 2010.
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