U.S. retail sales grow as incentives propell auto demand

U.S. retail sales probably rose in July for the first time in three months as incentives spurred auto purchases, indicating merchants are relying on discounts to spark demand, economists said before reports this week.

The 0.5 percent increase in sales followed a 0.5 percent June decline, according to the median estimate of 58 economists surveyed by Bloomberg News before Commerce Department figures Aug. 13. Other reports may show consumer prices were restrained and the trade gap was little changed.

Companies added fewer workers than forecast last month, pointing to a pace of recovery in the labor market that will do little to boost consumer spending, which accounts for 70 percent of the economy. Federal Reserve Chairman Ben S. Bernanke and fellow central bankers will take into consideration the mounting signs of slower growth when they meet in two days.

“Consumer spending is going to be touch-and-go all quarter,” said Ryan Sweet, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania. “Vehicle sales got off to a decent start but outside of autos, spending was generally weak in July.”

The Commerce Department’s report will show purchases excluding automobiles rose 0.3 percent last month, according to the survey median. Sales minus vehicles fell 0.1 percent in June and 1.2 percent the previous month.

Retailers reported July sales gains that missed analysts’ estimates as consumers cut spending ahead of the back-to-school season. Sales at 30 chains climbed 3 percent from a year earlier, less than the 3.2 percent average of analyst projections, Retail Metrics Inc. said last week. Department- store chain J.C. Penney Co.’s sales fell 0.6 percent.

Summer Merchandise

July is typically the slowest month of the third quarter for retailers as they clear out summer merchandise for the back- to-school season, the second-largest sales period after the year-end holidays.

Full story