US retail sales go flat in July, stoke growth fears

A customer browses Michael Kors handbags at the Macy's flagship store in New York, August 6, 2014.
Jin Lee | Bloomberg | Getty Images

U.S. retail sales were unexpectedly flat in July, pointing to some loss of momentum in the economy early in the third quarter.

The Commerce Department said on Wednesday retail sales, which had increased 0.2 percent in June, were held back by a second straight month of declines in receipts at auto dealers, as well as weak sales of furniture and electronics and appliances.

July's reading was the weakest since January. Economists polled by Reuters had forecast retail sales, which account for a third of consumer spending, increasing 0.2 percent last month.

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So-called core sales, which strip out automobiles, gasoline, building materials and food services, and correspond most closely with the consumer spending component of gross domestic product, edged up 0.1 percent in July. That suggested a moderation in consumer spending early in the third quarter.

Core sales rose by a revised 0.5 percent in June. They were previously reported to have increased 0.6 percent and economists had expected them to advance 0.4 percent in July.

The retail sales report, which was generally weak, suggested third-quarter growth will probably pull back after the April-June quarter's brisk 4.0 percent annualized rate.

Receipts at auto dealerships fell 0.2 percent in July after declining 0.3 percent the prior month. Sales at non-store retailers, which include online sales, slipped 0.1 percent.

Sales at clothing retailers rose 0.4 percent and receipts at sporting goods shops gained 0.2 percent.

Sales at electronics and appliances stores fell 0.1 percent, while receipts at building materials and garden equipment suppliers rose 0.2 percent.

--By Reuters

Correction: This story was updated to show retail sales were flat in July.