COMMERCE DEPT. REPORT SHOWS SLOWER ECONOMY
Byline: Jim Ostroff
WASHINGTON — The Commerce Department Friday confirmed what retail reports have been showing for the past couple of months: The economy is slowing, and consumers are cutting back on spending, especially on apparel.
Commerce’s monthly retail sales summary reported that overall retail sales rose just 0.2 percent during June, after the volatile automobiles category was excluded, well below analysts’ consensus expectations. When auto sales were included in this economic bellwether, retail sales rose a still-weak 0.5 percent for the month, to $269.28 billion, adding to evidence that the Federal Reserve’s incessant interest rate hikes finally are cooling the economy.
As in recent months, retail sales of building materials, hardware, mobile homes and garden supplies, which are very interest-rate-sensitive, slid 1.6 percent in June.
But apparel sales, which had been running ahead of the other sectors since early spring, declined by 1.9 percent to $11.64 billion in June and are just 3.1 percent higher than a year ago, Commerce reported.
Retail apparel sales rose at about a 1 percent rate during May and April.
In addition, general-merchandise stores’ retail sales inched up only 0.3 percent last month to $33.64 billion and were up 6.9 percent for the year ended June. In stark contrast, sales at general merchandise stores, which include discount, department and variety stores, rose 0.7 percent in May and 1 percent in April, providing further evidence of slowing sales.
If leased departments are excluded from the general-merchandise store performance, retail sales fell by 0.1 percent in June, marking the first monthly decline since December 1998.
Retailers selling interest-rate-sensitive home furnishings and furniture posted a 0.3 percent falloff in sales during June to $14.6 billion, following healthy sales increases of 0.5 percent and 1.5 percent during the preceding two months, respectively.
Separately, Commerce also reported that after-tax profits for retailers with assets of at least $50 million averaged 2.2 cents per dollar of sales during the first quarter of this year, down from the 3.6 cent average posted during the fourth quarter of 1999.
During the first quarter of 2000, these retailers reported after-tax profits of $7 billion, down from $12.4 billion in the preceding quarter, the agency reported.
The National Retail Federation didn’t need a weatherman to discern a change in the economic season.
“Consumer spending has become an exercise in moderation, thanks to six Federal Reserve interest-rate hikes,” totaling 1.5 percent since last June, the trade group said in a statement issued Friday after release of the new sales data.
The NRF’s chief economist, Rosalind Wells, contended there is a silver lining in the otherwise mixed retail sales data.
“Although consumer spending appears to be slowing a bit, it is still growing at a healthy rate,” she said.
“Employment and incomes continue to grow, and consumer confidence is still very high. There’s nothing to suggest a significant downturn in the industry.”