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US retail sales unexpectedly flat in July, clothing demand falls as online sales jump


US July retail sales were unexpectedly flat in June as consumers continued to cut back on discretionary spending, including clothing, while department stores took a major hit. Analysts had expected overall retail sales to rise 0.4% last month.

The Commerce Department said on Friday the unchanged reading last month followed an upwardly revised 0.8% reading in June, from the previously reported 0.6% increase. On a year-on-year basis, sales rose 2.3%.

Automobile, furniture and online sales were the only bright spots in July, the latter jumping 1.3%.

But clothing and accessories store sales fell 0.5% month-on-month, and were down 1.2% year-on-year. That comes on top of June’s 1% on-month slide and the 0.9% on-year dip.

Although department store sales rose a modest 0.5% on-month in July, they fell 4% on the year before.

General merchandise store sales inched up 0.1% on June, but slipped 1.1% on-year.

Sales at sporting goods, hobby, book and music stores rose 2.1% on-year in July but were down 2.2% on June. Receipts at building materials and garden equipment retailers fell 0.5% and petrol stations sales fell 2.7%.

There were also declines in sales at electronics and appliance stores while Americans also cut back on spending at restaurants and bars.

Despite the surprise weakness in July, consumer spending remains supported by a strong labour market, as well as rising home and stock market prices. The economy created a total of 547,000 jobs in June and July.

But Friday’s data suggests consumer spending is cooling after Q2’s 4.2% increase, tempering expectations of acceleration in economic growth in Q3. Analysts expects a 2.6% on-year gain in gross domestic product this quarter.

A more complete picture of consumer demand will emerge this week when some of the country’s largest chains, including Wal-Mart Stores and Home Depot report their latest results. Investors expect slight sales gains at Wal-Mart, and stronger growth from the big-box home improvement chain.

* Americans gained confidence in the economy in August, a development which could lead them to spend more and propel the economy to stronger growth in the back half of 2016. The University of Michigan’s confidence reading rose to 90.4 as of mid-month from 90 in July, falling short of consensus. Sentiment is also still lower than June’s 93.5. While a measure of how Americans feel about current economic conditions fell to 106.1 from 109 in July, expectations for where the economy rose to 80.3 from 77.8.


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