Retail sales took their largest fall since August 2005 amid weak demand for durables and falling gas prices, dropping 0.9% in June, according to data released by the Census Bureau. The drop was steeper than the 0.3% anticipated by economists. Excluding auto, retail sales dropped 0.4%; economists were calling for a 0.2% gain. Retail sales are up 3.8% over the last year. Economists have recently begun anticipating a sharp slowdown in consumer spending. First quarter growth of 4.2% could drop below 2%, they say. Furniture sales fell 3%, electronics and appliances fell 1.4%, and building materials were down 2.3%. Non-store retailers, including online stores, saw 1.2% growth over the month. Separately, the Labor Department reported that imports into the U.S. rose 1.0% in June, mainly on a 4.7% increase in imported petroleum prices. Excluding petroleum, the rise was a milder 0.2%. Export prices rose 0.3%. Over the past year, import prices are up 2.3%, while export prices have risen 4.1%. "Sales are definitely slowing down. We'll continue to see very modest gains in consumer spending. That will temper the economy's growth for the rest of the year," said Dresdner Kleinwort economist Kevin Logan.
Sources: Press release, MarketWatch I, MarketWatch IIBloomberg,
Commentary: Feeling Bearish? Don't Short This Market Yet • June Retail Same-Store Sales Roundup • Friday the 13th Market Performance: Nothing To Be Afraid Of
Stocks/ETFs to watch: S&P 500 Index (NYSEARCA:SPY), Diamonds Trust Series 1 ETF (NYSEARCA:DIA), iShares Lehman Aggregate Bond (NYSEARCA:AGG)
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