* Retail sales fall 0.5 percent in June, third straight drop
* Survey shows U.S. companies scaling back hiring plans
* "Empire State" factory index rises in July
* May business inventories rise 0.3 percent
By Jason Lange
WASHINGTON, July 16 U.S. retail sales fell in
June for the third straight month, the longest run of
consecutive drops since 2008 when the country was mired in
Sales slipped 0.5 percent, with declines across a wide swath
of industries from electronics and cars to building supplies,
the Commerce Department said on Monday. Analysts had expected a
"Evidence is increasingly clear that the U.S. economy is
slowing," said Jim Baird, an investment strategist at Plante
Moran Financial Advisors in Kalamazoo, Michigan.
The report adds to a spate of soft economic data that is
raising pressure on President Barack Obama ahead of his November
re-election bid. Republican challenger Mitt Romney is focusing
his campaign on the weak economy, which has plagued Obama's
The dollar declined against the euro and the yield on
10-year U.S. government bonds dropped to an all-time low as the
data stoked worries the economy was floundering and could need
more help from the Federal Reserve. U.S. stock prices san k.
Fed Chairman Ben Bernanke will testify to lawmakers on
Tuesday and Wednesday on the Fed's view of the economy.
Job creation in the United States has slowed dramatically in
the last few months as employers worry about a sagging global
economy hurt by Europe's snowballing debt crisis. Bernanke's
peers at central banks in China, the euro zone and Britain have
eased monetary policy this summer to prop up their economies.
The International Monetary Fund slashed its forecast for
global economic growth on Monday and urged European policymakers
to take bolder action to stem their crisis. It also warned that
China's economy risks a hard landing.
The U.S. factory sector also has shown signs of contraction
due to the global slowdown, although on Monday a survey showed
New York state manufacturers perked up in July. Still, new
orders shrank at the state's factories.
The retail data is worrisome because it suggests consumer
spending, which drives about two-thirds of the economy, is also
"This is another example of how broader economic uncertainty
is having an impact on economic activity," said Eric Fine,
managing director of Van Eck G-175 strategies in New York.
JPMorgan economist Michael Feroli called the retail report
"ugly across the board," lowering the firm's forecast for
second-quarter economic growth to 1.4 percent from 1.7 percent.
The economy grew at a 1.9 percent annual rate in the first
Separately, a poll showed on Monday that American companies
are scaling back plans to hire workers with a rising share of
firms saying the European debt crisis is taking a bite out of
Forty-seven percent of companies surveyed felt their sales
have dropped due to Europe's woes. Among companies that produce
goods rather than provide services, the impact was even greater.
In a separate report, the Commerce Department said U.S.
business inventories rose in May as motor vehicle dealers
restocked to meet demand.
Demand, however, looked weak in June. The retail sales
report showed receipts at motor vehicle and parts dealers
dr opped 0.6 percent last month.
Sales at electronics and appliance stores declined 0.8
percent, a nd w ere down 1 .8 percent at gasoline stations,
reflecting a decline in gasoline prices.
Often, relief at the pump allows consumers to spend their
money elsewhere. But that didn't seem to be the case in June.
"The consumer is obviously struggling, not benefiting much
from weak gasoline prices," said David Sloan, an economist at
4Cast in New York.
And gasoline prices might not continue to decline. So far in
July, prices for crude oil have risen.
Consumers also face the prospect of higher taxes and less
government spending next year, a combination that could
po tentially pu sh the economy into recession.
Lawmakers are debating how to avoid this "fiscal cliff,"
which is built into current law. Democrats warned on Monday they
are prepared to let all Bush-era tax cuts expire if Republicans
insist on extending lower rates for top earners.