Slumping auto purchases put brakes on retail sales
Retail sales fell in May for the first time in 11 months, dragged down by a sharp drop in receipts at auto dealerships, according to a government report that could raise fears of a prolonged economic slowdown, Reuters reported.
Total retail sales slipped 0.2 percent, the Commerce Department said on Tuesday, after a downwardly revised 0.3 percent increase in April.
Economists polled by Reuters had forecast retail sales falling 0.4 percent from April’s previously reported 0.5 percent rise.
In the 12 months leading up to May, retail sales were up 7.7 percent.
Retail sales last month were depressed by a 2.9 percent drop in sales of motor vehicles, the largest decline since February 2010, as a shortage of parts following the earthquake in Japan left inventories lean and prompted manufacturers to raise prices.
Excluding autos, retail sales rose 0.3 percent last month, the smallest gain since July, after rising 0.5 percent in April.
The report painted a generally weak picture of consumer spending, with sales at food and beverage stores falling 0.5 percent, while receipts at sporting goods, hobby, book and music retailers dropped 0.4 percent. Sales of electronics and appliances fell 1.3 percent, the largest decline since March 2010.
However, clothing store receipts edged up 0.2 percent last month, while sales at building materials and garden equipment suppliers rose 1.2 percent.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 2.2 percent annual pace in the first quarter.