13 August 2013 16:31 [Source: ICIS news]
WASHINGTON (ICIS)--US retail sales rose by 0.2% in July from June to $424.5bn (€318.4bn), the Commerce Department said on Tuesday, but the advance was lower than the June gain and a major business group said that spending essentially has stalled.
In its monthly report, the department also noted that retail sales last month were 5.4% ahead of the pace seen in July 2012.
But the meagre 0.2% gain in July’s sales was disappointing to economists, especially that June’s retail activity was revised upward to a 0.6% gain from the originally estimated 0.4% advance.
US retail sales are a key measure of consumer spending and sentiment. Consumer spending in turn is the principal driving engine of the US economy, accounting for as much as 70% of all commercial activity and production.
In addition to the mediocre sales gain overall for last month, in two key areas sales were down in July from June.
The department’s report said that US auto sales fell by a full point in July, and sales at furniture and home furnishings stores were off by 1.4% last month.
Those declines are worrisome, said the National Retail Federation (NRF), because automobile manufacturing and home building are key sectors of the US economy.
In its analysis, NRF said the decline in home furnishings and a related 0.4% downturn in sales of building supplies suggest that the nation’s housing recovery could be in trouble.
NRF chief economist Jack Kleinhenz said that “spending has stalled and the economy is stuck in neutral”.
“Even with modest employment gains and steady consumer confidence, Americans remain in a cautiously-positive spending pattern,” he said.
“While clothing and sporting goods retailers saw modest gains with early back-to-school shopping, home based retailers saw marked decreases, possibly indicating the end of the year-long housing boom,” Kleinhenz added.
Automobile manufacturing and new home construction are key downstream consuming industries for a wide variety of chemicals, resins and derivative products.
NRF president Matthew Shay said that federal fiscal and monetary policies and uncertainties “combined with stagnant economic and employment conditions continue to breed a volatile market with extreme swings in consumer spending”.
“The economy can’t seem to maintain any amount of momentum,” Shay said, adding: “We just can’t seem to pull ourselves up.”
($1 = €0.75)
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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