Retail sales were little changed in July, the worst performance in six months, as car demand slowed and tepid wage growth restrained U.S. consumers.
The slowdown in purchases followed a 0.2 percent advance in June, the Commerce Department reported Wednesday in Washington. The median forecast of 82 economists surveyed by Bloomberg called for a 0.2 percent gain. Excluding cars, sales rose 0.1 percent.
Job growth has yet to stoke the type of wage gains needed to boost household purchases, a sign the economic expansion will probably not sustain the second-quarter pickup into the end of the year. Retailers such as Macy’s Inc. are relying on promotions and discounts to entice customers, whose spending accounts for about 70 percent of the economy.
“There’s no sign of momentum or enthusiasm out of the consumer right now,” said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Conn., who accurately forecast Wednesday’s sales figure. “Income growth continues to be so-so. Employment has picked up in recent months but you’re not seeing the growth in hours worked that would generate big increases in paychecks. I don’t think people have the wherewithal, not to mention the inclination, to ramp it up.”
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Estimates in the Bloomberg survey ranged from a decline of 0.1 percent to a 0.6 percent gain. June’s reading was unrevised.
Eight of 13 major categories showed an increase in sales last month, paced by clothing, grocery and personal-care stores, today’s report showed.
The labor market, while improving, has yet to return to full strength. Job openings rose in June to the highest level in more than 13 years, the Labor Department reported Tuesday. Employers have added more than 200,000 jobs in each of the past six months, the best performance since 1997.
Nonetheless, inflation-adjusted average weekly earnings dropped 0.2 percent in the 12 months through June, the worst performance since October 2012, according to Labor Department data.
Among retailers, motor vehicle purchases cooled last month, falling 0.2 percent from June, today’s figures showed. At the same time, sales of cars and parts were up 6 percent in July from the same month in 2013, with auto dealers benefiting from pent-up demand and easy access to credit. Industry figures show auto sales are on track for their best year since 2006.
General Motors, Toyota, Ford, Nissan and Chrysler reported volume gains of 9 percent or greater in July from a year earlier, with industrywide sales up 5 percent, according to Autodata Corp. Analysts predict 16.3 million total sales for 2014.
At Toyota, sales were up 11.6 percent last month, the company’s best July in seven years, Vice President Bill Fay said.
“There’s every reason to believe the auto industry can maintain these levels in the months ahead,” Fay said on an Aug. 1 earnings call.
“The low interest-rate environment gives consumers a great chance to come in and get very affordable financing or a very good lease deal, which I think has, in part, fueled the strength of the industry this year,” Fay said. “With interest rates forecasted to stay pretty low, I think that’s certainly one component of all of our optimism going forward.”