Retail sales last month rose less than expected

By Bryan Mena, CNN

Washington (CNN) — Spending at US retailers last month was weaker than expected, despite the World Cup drawing tourists from around the world and online sales events.

Retail sales rose 0.2% in June from the prior month, the Commerce Department said Thursday, down sharply from May’s revised 1% increase. That was lower than expectations of a 0.3% increase, according to a poll of economists by data firm FactSet. Retail sales are adjusted for seasonal swings but not inflation.

The World Cup and Amazon’s Prime Day sale helped boost spending last month, according to economists, though lower gas prices weighed on the government’s retail figures, since they’re not adjusted for inflation. Excluding sales at gas stations, spending in June was up by a solid 0.7%.

A measure of retail spending that strips out volatile categories, such as sales of building materials and gasoline, rose 0.5% in June, down from May’s 0.8%, but slightly higher than expectations of a 0.4% increase. That shows underlying consumer demand continued to hum along last month.

Sales were up across most categories last month, rising the most among online retailers (1.9%) — likely thanks to the Prime Day sale — and car dealerships (1.9%). Retail spending declined the most at gas stations, plummeting 5.3%, and at health and personal care stores, which fell 0.8%.

Spending at restaurants and bars edged higher by just 0.1% last month, despite an influx of World Cup tourists. Sales at department stores were also up by only 0.1% in June.

Consumer spending, which accounts for about two-thirds of the US economy, has held up this year, despite higher inflation and unusually weak consumer sentiment. That’s partly due to layoffs and a still-solid labor market, though low-income households are feeling the pain of price hikes and mounting debt more so than their high-income counterparts, who have benefited from a resilient stock market. Economists refer to that divergence as the K-shaped economy.

This story is developing and will be updated.

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