Retail Sales Fall Sharply

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July 15, 2004 -- Fewer Americans were in the market for a new car, while spending at the gas pump dipped in June, leading to a sharper-than-expected 1.1 percent decline in retail sales. The drop was the largest in 16 months.

Today's disappointing numbers from the Department of Commerce came on the heals of a 1.4 percent jump in retail sales in May. A 4.3 percent decline in automobile sales was the biggest drag on sales. Excluding autos, retail sales fell a mild 0.2 percent.

Gas sales fell 0.9 percent, as consumers are still being hit with high prices. Removing gas and auto sales from the mix, sales were virtually flat, falling only 0.1 percent.

Economists attributed the slip in sales largely to poor weather and high energy prices.

The consensus of economists surveyed by Barron's forecasted a decline of 0.6 percent including autos and a slight gain of 0.2 percent excluding them.

Instead, sales were up a healthy 6.3 percent versus June 2003. Total sales of autos for April through June 2004 were up 7.7 percent from the same period a year ago, noted the report from the Commerce Department.

In addition to auto dealers and gas stations, department stores, clothing stores, food and beverage stores and bars and restaurants all experienced declines in sales in June.

Those seeing more action at the cash register in June were furniture stores, electronics and appliance dealers, building and garden supplies dealers, health and beauty care stores and sporting goods, books and music stores.

Matt Quinn contributes to the Wall Street Journal's corporate finance blog. He has also written extensively about banking and corporate finance for publications including Inc., American Banker, and Financial Week. He lives in Brooklyn, New York.