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Economy

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At a glance
Other reports released Monday included:
Business inventories: U.S. companies added to their stockpiles in May. But sales fell for a second straight month, adding to worries that the economy has slowed. Business stockpiles grew 0.3 percent in May from April, matching April’s increase, the Commerce Department reported Monday. Business sales fell 0.1 percent in May, matching the April decline.
Hiring trends: Results of a survey by the National Association for Business Economics found less evidence of hiring. In the quarterly survey of 67 economists who work for companies or industry trade groups, 22 percent reported rising employment in July, down from about 30 percent in the last three surveys and 42 percent a year ago. On the positive side, only 9 percent said employment was falling. The rest said it was unchanged.
Associated Press
Americans cut their spending at retail businesses for a third straight month, as a weak job market made consumers more cautious. Retail sales fell 0.5 percent in June from May, the Commerce Department said Monday.

Retail sales slip for 3rd month

Growth estimates shaved by analysts

– The outlook for the U.S. economy appeared dimmer Monday after a report that Americans spent less at retail businesses for a third straight month in June.

The report led some economists to downgrade their estimates for economic growth in the April-June quarter.

Many now think the economy grew even less than in the first quarter of the year, when it expanded at a sluggish 1.9 percent annual rate.

Spending in June fell in nearly every major category – from autos, furniture and appliances to building, garden supplies and department stores. Overall, retail sales slid 0.5 percent from May to June, the Commerce Department said.

Retail sales hadn’t fallen for three straight months since the fall of 2008, at the height of the financial crisis.

The weak U.S. spending figures were released on the same day that the International Monetary Fund slightly lowered its outlook for global growth over the next two years.

Stocks fell after the Commerce Department report was issued. The Dow Jones industrial average sank 74 points in early trading. Broader indexes also declined. Later in the day, stocks regained some of their losses.

“However hard you look, there’s just no good news in this report,” said Paul Ashworth, chief U.S. economist at Capital Economics.

Weakening retail spending could make the Federal Reserve more likely to act further to try to encourage more borrowing and spending by lowering long-term interest rates. The Fed’s policy committee will meet at the end of this month.

Most economists don’t expect new Fed action after that meeting. But some said Monday’s report, coming after three straight months of tepid hiring, makes some Fed action more likely by year’s end.

Fed Chairman Ben Bernanke will testify to Congress about the economy on today and Wednesday.

– Associated Press

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