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Retail sales rise for second straight month

Total sales increase beats expectations although most of the gains are fueled by gasoline station sales, auto purchases and electronics sales.

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By Parija B. Kavilanz, CNNMoney.com senior writer

Where do you plan to shop most for back-to-school merchandise?
  • Drug stores
  • Discount stores
  • Department stores
  • Specialty stores

NEW YORK (CNNMoney.com) -- Retail sales rose for the second straight month in June, the government reported Tuesday, but the gains came mostly from auto purchases, higher gas prices and a modest pick up in electronics sales.

The Commerce Department said total retail sales rose 0.6% last month, compared with May's gain of 0.5%.

Economists surveyed by Briefing.com had been expecting June sales to increase 0.4%.

Sales excluding autos and auto parts also rose 0.3%, softer than expected, compared to a 0.5% increase in the measure in May.

Economists had forecast a gain of 0.5% in June sales, excluding auto purchases.

The report showed auto sales rose 2.3% in June while gasoline station sales jumped 5% in the month. Electronics sales rose 0.9%, while sales at sporting and music stores also increased 0.9%.

But June was a disappointment in most other retail categories. Sales at clothing sellers were flat in June versus the prior month, department store sales slumped 1.3% and sales at general merchandise stores slipped 0.4%.

Back-to-school jitters: The sales declines in these core retail sectors will likely heighten concerns about the upcoming back-to-school shopping season, which is the second most-important sales event of the year for merchants after the year-end holiday shopping period.

In that regard, the National Retail Federation (NRF) on Tuesday forecast more dour news for the industry. The trade expects expects back-to-school spending to drop 7.7% this year as more households cut back on purchases amid pay cuts and continuing job losses.

"I would expect back-to-school sales to be soft this year because there's just not a lot of support for consumers," said Adam York, economist with Wells Fargo Securities.

The biggest insecurities consumers are facing right now are weakness in the job market and weak or even declining income growth, York said.

Still, York is feeling somewhat more optimistic about the year-end holiday shopping period. That two-month period of November and December can account for 50% or more of merchants' sales and profits for the full year.

"Maybe closer to Christmas, consumers will be in better shape and they are feeling more secure about their incomes and jobs," York said. "Hopefully, we'll also see some growth in the economy or at least the end of declines by then." To top of page

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