U.S. retail sales unexpectedly flat in July

[August 12, 2016]  WASHINGTON (Reuters) - U.S. retail sales were unexpectedly flat in July as Americans cut back on purchases of clothing and other goods, pointing to a moderation in consumer spending that could temper expectations of an acceleration in economic growth in the third quarter.

The Commerce Department said on Friday that the unchanged reading last month followed an upwardly revised 0.8 percent

increase in June. Retail sales in June were previously reported to have increased 0.6 percent.

Sales rose 2.3 percent from a year ago. Excluding automobiles, gasoline, building materials and food services,

retail sales were also unchanged last month after an unrevised 0.5 percent increase in June.

These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Economists had forecast overall retail sales rising 0.4 percent and core sales climbing 0.3 percent last month.

Robust consumer spending helped to cushion the blow on the economy from an inventory correction and prolonged drag from

lower oil prices, which restricted GDP growth to an average 1.0 percent annualized rate in the last three quarters.

Friday's data suggested consumer spending was cooling after the second quarter's brisk 4.2 percent rate of increase.

Despite the surprise weakness in July, consumer spending remains supported by a strong labor market, as well as rising

home and stock market prices. The economy created a total of 547,000 jobs in June and July.

The Atlanta Fed is currently forecasting the economy to grow at a 3.7 percent annualized rate in the third quarter.

Automobile, furniture and online sales were bright spots in July. Sales at auto dealerships increased 1.1 percent in July after rising 0.5 percent in June.

Shoppers are seen in an American Eagle Outfitters retail store in Manhattan, New York, U.S., May 13, 2016. REUTERS/Mike Segar - RTX2E88V

Online retail sales jumped 1.3 percent, while receipts at clothing stores fell 0.5 percent.

With consumers cutting back on discretionary spending, sales at sporting goods and hobby stores fell 2.2 percent. Receipts at building materials and garden equipment retailers fell 0.5 percent.

There were declines in sales at electronics and appliance outlets and service stations. Americans also cut back on

spending at restaurants and bars.

(Reporting by Lucia Mutikani; Editing by Paul Simao; [e-mail]; 1 202 898 8315; Reuters; Messaging: [e-mail])

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