WASHINGTON • Retail sales in the United States were unexpectedly flat last month as Americans cut back on purchases of clothing and other goods, pointing to a moderation in consumer spending that could temper expectations of an acceleration in economic growth in the third quarter.

The Commerce Department said yesterday that the unchanged reading last month followed an upwardly revised 0.8 per cent increase in June. Retail sales in June were previously reported to have increased 0.6 per cent. Sales rose 2.3 per cent from a year ago.

Excluding cars, petrol, building materials and food services, retail sales were also unchanged last month after an unrevised 0.5 per cent increase in June.

These so-called core retail sales correspond most closely with the consumer-spending component of gross domestic product.

Economists had forecast overall retail sales rising 0.4 per cent and core sales climbing 0.3 per cent last month.

Robust consumer spending helped to cushion the blow on the economy from an inventory correction and prolonged drag from lower oil prices, which restricted GDP growth to an average 1 per cent annualised rate in the last three quarters.

Despite the surprise weakness last month, consumer spending remains supported by a strong labour market, as well as rising home and stock-market prices. The economy created a total of 547,000 jobs in June and July.

Car, furniture and online sales were the only bright spots last month. Sales at car dealerships increased 1.1 per cent last month after rising 0.5 per cent in June.

Online retail sales jumped 1.3 per cent, while receipts at clothing stores fell 0.5 per cent.

With consumers cutting back on discretionary spending, sales at sporting goods and hobby stores fell 2.2 per cent. Receipts at building materials and garden equipment retailers fell 0.5 per cent.

There were declines in sales at electronics and appliance outlets and service stations. Americans also cut back on spending at restaurants and bars.

REUTERS