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Retail sales up slightly in June after May drop

WASHINGTON — Consumers spent more on cars and in big chain stores in June but falling gas prices held back retail sales.

The Commerce Department said Thursday that retail sales rose a modest 0.1 percent last month. That follows a 0.1 percent decrease in May, the first time in 11 months that sales fell.

When excluding autos, retail sales were flat in June.

A rebound from spring supply disruptions stemming from the Japan crises helped pushed auto sales up 0.8 percent. And sales at general merchandise stores, which include stores such as Wal-Mart and Target, rose 0.4 percent.

Falling gas prices pushed station sales down 1.3 percent. But consumers are still paying nearly a dollar more for gas than they did a year ago. And a slowdown in hiring has made many more cautious about spending.

The economy added just 18,000 jobs last month, the fewest in nine months. The unemployment rate rose to 9.2 percent, the highest rate this year.

Analysts hope that the economy will regain momentum in the second half of this year if gasoline prices moderate.

Gas prices have dropped since peaking in early May at a national average of nearly $4 per gallon.

A decline in gas prices means consumers have a little more money to spend on discretionary items. But prices are still high compared with last year. On Wednesday, motorists paid roughly $3.65 per gallon, according to AAA. That’s 93 cents more than the same period a year ago.

Best June in 12 years

Big retailers posted strong sales in June. Warm weather and deep discounts drew consumers to Target, Wal-Mart and other major chains. The International Council of Shopping Centers said retailers collectively enjoyed their best June in 12 years, based on a survey of 28 store chains. The figures are based on revenue at stores open at least a year.

Falling gas prices gave a small boost in June to auto sales of General Motors and Ford, which have relied on truck sales but now have strong line-ups of smaller, fuel-efficient models as well. Toyota and Honda did not fare as well, as they ran short of cars because of ongoing problems from the Japanese natural disasters.

Auto sales aren’t expected to consistently pick back up until fall, when Japanese production is at full capacity.

Consumer spending is closely watched because it accounts for 70 percent of economic activity. The economy expanded at an annual rate of 1.8 percent in the January-March period, and most economists don’t expect growth to be much stronger in the April-June quarter. The jump in energy prices has mostly offset the positive impact of a reduction in Social Security payroll taxes.