U.S. Retail Sales Rise Less Than Expected, Building Materials Fall

U.S. retail sales rise less than expected, building materials fall
AP/Mike Groll

WASHINGTON, July 15 (Reuters) - U.S. retail sales rose less than expected in June, adding to signs of a slowdown in economic growth that could argue against the Federal Reserve's plan to start trimming its monetary stimulus later this year.

The Commerce Department said on Monday retail sales increased 0.4 percent last month as demand for automobiles soared. However, sales of building materials fell.

It was still the third straight month of gains in sales and followed a revised 0.5 percent rise in May.

Economists polled by Reuters had forecast retail sales, which account for about 30 percent of consumer spending, rising 0.8 percent after a previously reported 0.6 percent gain in May.

Higher gasoline prices also accounted for part of the increase in retail sales last month and the overall tone of the report was mixed.

So-called core sales, which strip out automobiles, gasoline and building materials and correspond most closely with the consumer spending component of gross domestic product, edged up 0.1 percent after rising 0.2 percent in May.

The signs of slower domestic demand, as well as weak trade and manufacturing data, comes as the Fed is debating cutting back the $85 billion in bonds it is purchasing each month to keep borrowing costs low and stimulate the economy.

Last month, receipts at auto dealerships rose 1.8 percent after advancing 1.4 percent the prior month. Excluding autos, sales were flat after rising 0.3 percent the prior month.

Sales at building materials and garden equipment suppliers fell 2.2 percent, the weakest reading since May last year. (Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Originally published