U.S. Retail Sales Defy Forecasts and Drop in June

Economists had mostly predicted an increase in sales for the month

Jul 16, 2012, 1:58 pm EDT | By Christopher Freeburn, InvestorPlace Writer

U.S. consumers pulled back from spending last month as fears over the troubled job market grew.

The Commerce Department said on Monday that retail sales in June dropped 0.5%, the third consecutive monthly decline, disappointing economists who had expected a rise in retail sales, Reuters noted.

Economists had anticpated a retail sales increase of 0.2% for June, which would have reversed a 0.2% decline in May.

Consumer spending at department stores fell 0.7% in June, while furniture retailers saw sales contract 0.8%.

The Commerce Department data prompted negative revisions in projected economic growth from analysts at Wall Street firms including Credit Suisse (NYSE:CS), Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS).

Credit Suisse cut is estimate for U.S. second-quarter growth from 2% to 1.6%.

Retail stocks also fell the sting of June’s unexpectedly-poor numbers. Shares of Target (NYSE:TGT), Wal-Mart (NYSE:WMT) and Kohl’s (NYSE:KSS) slipped fractionally in Monday afternoon trading, while shares of discount retailer J.C. Penney (NYSE:JCP) fell almost 2%. Shares of Macy‘s (NYSE:M), on the other hand, rose slightly.