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Retail Sales Slightly Light

Core sales rose just 0.3% in July from June.
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Retail sales came in weaker than expected for July, the government said Thursday, as merchants transitioned into summer clearance mode.

The Commerce Department said retail sales in July increased by 1.8% from June, falling short of economists' estimates calling for a 2% gain. Excluding auto sales, which were strong thanks to aggressive promotional campaigns by manufacturers in Detroit, retail sales were up 0.3%. By that measure, economists were expecting a 0.9% gain.

Compared with July 2004, retail sales rose 10.3%, while gasoline sales rose 20.3% and auto sales were up 17.9%.

The report fell in line with monthly sales reports from national retail chains, which were largely a disappointment.

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Ian Shepherdson, chief economist with High Frequency Economics, noted that his core retail sales number -- excluding auto, gas and food sales -- was up 0.1% in July. In the second quarter, that measure rose at an annual rate of 3.5% -- the smallest gain in 11 months.

"This could be the effect of higher gas prices, or it might just mean spending has been temporarily diverted into autos," Shepherdson said in a research note. "Hot weather might also have hit department stores,

where sales were down 1% in July."