Retail sales rose less than forecast in June as demand cooled at building materials outlets and restaurants, showing the biggest part of the U.S. economy lacked momentum as the second quarter drew to a close.
The 0.4% gain followed a 0.5% increase in May that was less than previously reported, Commerce Department figures showed today in Washington. The median forecast of 82 economists surveyed by Bloomberg called for a 0.8% advance. Sales were unchanged excluding the biggest jump in automobile purchases since November.
The figures show consumer spending, which accounts for about 70% of the economy, may take time to accelerate as Americans stay frugal and rebuild savings. At the same time, cheaper borrowing costs, household wealth backed by home and stock prices and an improving job market are helping sustain demand for big-ticket items such as motor vehicles.
“The consumer was less engaged in the second quarter,” said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit. Price is the second-best forecaster of retail sales over the past two years, according to data compiled by Bloomberg. “The numbers are disappointing in comparison to expectations but the overall picture is still encouraging” given job growth and improved household balance sheets, he said.
Stock-index futures held gains after another report showed manufacturing in the New York area picked up. The contract on the Standard & Poor’s 500 Index expiring in September rose 0.2% to 1,673.7 at 8:50 a.m. in New York.
The Federal Reserve Bank of New York’s general economic index climbed to 9.5, the highest since February, from 7.8 last month. Readings greater than zero signal expansion in New York, northern New Jersey and southern Connecticut. The median projection in a Bloomberg survey of 50 economists called for a reading of 5.
The world’s largest economy will expand at a 2.3% annualized pace in the third quarter after cooling to a projected 1.6% rate in the April through June period, according to the median forecast in a Bloomberg survey from July 5 to July 10. Household spending also will pick up, economists forecast.
Estimates in the Bloomberg survey for retail sales ranged from no change to a 1.3% advance. The reading for May was revised from an initially reported 0.6% increase.