Autos Fuel Increase in Retail Sales; Other Spending Stalls

U.S. retail sales rose for a second month in July, lifted by zero-interest financing for automobiles and by a boost in gasoline prices.

But excluding cars and fuel, spending was unchanged. The overall increase masked declines in sales at retailers of appliances, building materials, clothing, electronic goods and furniture.

Total retail sales rose 1.2% in July after a 1.4% gain in June that was larger than previously estimated, the Commerce Department said Tuesday.

But “the boost in July auto sales appears to have pulled sales away from other items,” said Joseph LaVorgna, economist at Deutsche Bank Securities in New York.

The Federal Reserve on Tuesday decided against cutting interest rates to help spur new spending. But the Fed indicated it has become more concerned about the risk of an economic slowdown.

Sales at car and parts dealerships jumped 4.2% in July, matching June’s increase.

The June gain was the biggest since October, when manufacturers offered incentives to lure back buyers after the Sept. 11 terrorist attacks.

Gasoline sales rose 2.7% in the month as prices increased. The average cost at the pump for all grades of gasoline rose to $1.44 a gallon in July from $1.42 a gallon the previous month, according to data from the Energy Department.

On the down side, sales at clothing and accessory stores fell 1.3% in July. Department stores sold 0.1% less merchandise. Sales at electronics and appliance stores fell 1%, and furniture sales slid 1.4%, the biggest drop since September.