The US Economy--June Retail sales drop

June retail sales unexpectedly fall 0.1%: 14 th July, 2006. WASHINGTON — Consumers continued to curtail spending last month as rising gasoline prices dampened purchases of other goods, a fresh indication of a cooling economy. The cutback unexpectedly pushed retail sales into negative territory in June; they dipped 0.1% after edging up by the same amount in May, the Commerce Department reported Friday. Excluding gasoline sales, June retail sales fell 0.2%. The latest figure was an another indication that gasoline prices "are beginning to bite and are beginning to squeeze consumers pretty hard," said Nariman Behravesh, an economist with Global Insight in Lexington, Mass. The decline surprised economists, who had predicted an increase of 0.4% for June retail sales. Still, the $363.8 billion estimated to have been rung up in June marked a 5.9% increase from the same month in 2005. Economic unease has only deepened since June. In recent days, surging oil prices and interest rate jitters have soured Wall Street's mood. Stocks plummeted for a second straight session Thursday, with the Dow Jones industrial average dropping almost 167 points for a two-day loss of 288. Escalating violence in the Middle East, with Israel widening its offensive in Lebanon on Friday, carried oil to a new high of more than $78 a barrel amid concern over possible supply disruptions. Analysts say U.S. consumers, who have been the driving force in the four-year-old economic expansion, are beginning to tire under an array of adverse forces such as rising interest rates, a cooling housing market and slowing growth in employment. Consumer spending, which accounts for two-thirds of total economic activity, helped power the economy to 5.3% growth at an annual rate in the first three months of the year. Analysts believe economic growth will slow to around a 3%rate in the current quarter, reflecting a weaker consumer sector. The 0.1% decline in June was fueled by a 1.4% drop in auto sales, an area of continued weakness. The Commerce Department said sales at gasoline stations climbed 1.1% following a 1.9% gain in May, as rising oil prices continued to inflate prices at the pump. Gas station sales were up 20.4% from June 2005. Weaker retail sales might persuade the Federal Reserve that growth is slowing enough to keep inflationary pressures in check as it considers whether to end its two-year campaign of raising interest rates to keep the economy cool and avoid inflation. Retail sales excluding motor vehicles and parts advanced 0.3% compared with an upwardly revised 0.7% increase in May, previously reported as a 0.5% gain. Analysts had forecast an increase of 0.4% in June. Sales of motor vehicles and parts dropped 1.4% and when cars, parts and gasoline were excluded, retail sales edged up 0.1%. Furniture and home stores sales rose 1.3% and were up 9.3% from a year ago. Sales at building materials and garden equipment stores were down 1.0%. [From Internet] Best wishes, Suman Mukherjee India. http://sumanspeaks.blogspot.com www.bcozindia.com