Consumer spending cools off in June

JULY 17, 2006 - Washington -- The outdoor temperatures might have been sizzling this June, but consumer spending is tepid, according to a new report from the National Retail Federation (NRF). The NRF reports that retail industry sales for June (excluding automobiles, gas stations, and restaurants) rose 6.7 percent over last year and increased only 0.2 percent seasonally adjusted over May.

The retail organization's figures were only slightly better than the U.S. Commerce figures released Friday, which indicated total retail sales rose 6.2 percent unadjusted, year over year, and fell 0.2 percent for May when seasonally adjusted. Both sets of figures indicate that consumer spending is slowing down this year, even though year-over-year increases remain strong.

"After months of speculation, consumers are beginning to pull back," NRF Chief Economist Rosalind Wells said in a press release issued Friday. "Retailers can expect the second half of the year to show moderate gains due to the slow down in the housing market and other economic factors such as rising interest rates and higher gas prices."

Health and personal care stores rose a robust 8.6 percent unadjusted from last year, while increasing a slight 0.7 percent seasonally adjusted over May, NRF says. Sporting goods, hobby, book and music stores also showed strong growth, rising 11.3 percent unadjusted from last June, while increasing a modest 0.4 percent seasonally adjusted from May. Clothing and clothing accessories stores, benefiting from the summer heat rose 5.9 percent unadjusted from last June, but only 0.3 percent from May. Building material and garden equipment and supplies dealers still showed steady growth, up 8.4 percent unadjusted from last June.

However, seasonally adjusted comparisons from the previous month show a 1 percent drop.In spite of a slowing housing market, furniture and home furnishings stores remain healthy with a 10.4 percent increase in sales unadjusted from last year and 1.3 percent seasonally adjusted increase month-to-month, the NRF reports.