July retail sales are flat, a sign of consumer caution

Consumers continued to shop sparingly in July, showing a reluctance to spend despite signs of a booming job market.

Retail sales in July were flat compared with those of the previous month, the Commerce Department said Friday. The report ended three straight months of gains, although June was revised up slightly to 0.8%, from 0.6%.

This week, Kohl’s and Macy’s both reported that sales fell in the second quarter, although not as much as expected. J.C. Penney also reported a net loss for the same period. Department stores have continued to struggle, with Macy’s announcing it was closing 100 stores and Coach this week saying it plans to pull its products from 250 retail locations.

American consumers have continued to defy economists’ expectations, and their caution could weigh on economic growth in the third quarter. The report comes after a surprisingly robust jobs report that indicated the labor market had recovered from a springtime hiccup.

Last week, the Labor Department said private- and public-sector employers added 255,000 net new jobs in July. Average hourly earnings jumped 8 cents to $25.69 in July, much better than the 2-cent rise the previous month.

But after years of economic turmoil, many consumers apparently are keeping a tight rein on their expenditures, opting to sock away their savings from recent lower oil prices or to use the money to pay down debts.

Last month, 8 of 13 sales categories reported a decline.

Clothing and accessories shops slid 0.5%, while building and garden suppliers also fell 0.5%. Electronic and appliances stores saw a 0.1% drop.

Gas station sales, which have been dragged down by cheap prices at the pump, dropped 2.7%.

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UPDATES:

7:30 a.m.: This article was updated with additional background on department store earnings.

This article was originally published at 6:15 a.m.