U.S. retail sales showed an unexpected drop in the month of June, according to figures released Monday by the Commerce Department.
Advance estimates for U.S. retail sales for June came in at a seasonally adjusted level of $401.5 billion, a 0.5 percent drop from May levels. The drop came after sales fell 0.2 percent in May
Most economists had expected retail sales to rebound in June rather than continuing to contract, with the consensus forecast calling for 0.2 percent growth.
The unexpected decrease marked the third consecutive monthly decrease in sales, with the drop in sales in April revised to show a 0.5 percent decrease compared to the previously reported 0.2 percent drop.
Jennifer Lee, senior economist at BMO Capital Markets, called the continued drop in sales “an unexpected but not shocking-knock-me-off-my-chair move, considering the headwinds consumers are facing these days.”
A decrease in automotive sales drove some of the overall decline for the month, with sales by motor vehicle and parts dealers dropping by 0.6 percent.
Non-automotive retail sales, which most economists had expected to show a 0.1 percent increase after a 0.4 percent decline in May, also continued to contract, falling by 0.4 percent in June.
Gas station sales posted one of the most dramatic drops of the various retail categories, tumbling by 1.8 percent for the month.
Excluding both automotive and gasoline sales, retail sales were down a slightly smaller 0.2 percent for June, though that figure is still well below the 0.3 percent growth predicted by most economists.
Virtually every sector of the retail economy saw contractions in June, with sales by building and garden supply store and sporting, hobby, book and music stores showing notable drops. Both sectors saw 1.6 percent declines in sales.
Sales were also down notably in furniture, electronics, health and personal care, and department stores, while clothing stores, food and beverage stores, and non-store retailers saw modest increases in sales.
Rob Carnell, chief international economist at ING, said, “Bright spots are hard to find in data like this. Perhaps one is that together with declining inflation, such soft activity data makes it more likely that the Fed will undertake QE3, perhaps at the August 1 meeting (but more likely at the September 13 one).”
Compared to June of 2011, retail sales remained up 3.8 percent, with non-automotive retail sales were up by 3 percent over last year.