US retail sales drop of 0.5% seen in June reflects economic slide

According to the latest estimation from the Commerce Department, US retail sales, that account for about half of total consumer spending and about a third of final sales in the US economy, dropped 0.5% in June to a seasonally adjusted $360.2 billion that reflects the economy to slow down slightly. 

Details of the research were mixed. The declines were stronger in sales of durable goods and gasoline, while sales of soft goods were generally healthy.

Sales fell for the second straight month, on the heels of a string of seven consecutive increases, the government's data showed.

Compared to June 2009, sales are up 4.8%. And for the first six months of the year, retail sales were 6.5% higher than the same period a year ago. Sales fell an upwardly revised 1.1% in May, compared to a 1.2% decline originally reported.

The fade in June was expected, based on earlier reports from retailers and from automakers.

Excluding a 2.3% drop in motor vehicle sales, retail sales for the month fell 0.1% to $299.2 billion, largely in line with the 0.2% decline expected.

Sales at gasoline stations also dropped, down 2% as pump prices declined. Excluding gasoline, sales fell 0.3%.

Excluding autos and gasoline, sales rose by 0.1% in June, a reversal after having fallen 1% in May.

Despite slide seen in May and June, retail sales for the second quarter were up 1% compared with the first quarter.

Meantime economists are predicting a modest increase in inflation-adjusted consumer spending for the second quarter, consistent with a 3% annualized growth rate in real gross domestic product.