NEW YORK (AP) — Stores steepened discounts more than planned in June to help drive recession-scarred customers into the malls to buy summer merchandise. But shoppers spent cautiously amid escalating job worries, resulting in modest gains for many merchants.

The lacklustre performance, being compared with a weak June 2009, is raising concerns about the back-to-school shopping season and the health of the economic recovery.

The International Council of Shopping Centers' index of June retail sales rose three percent, the low end of its growth forecast that ranged from three to four percent. But that's compared with a 5.1 percent decline in June 2009.

The figures are based on revenue at stores open at least a year and are a key indicator of retailers' health. The figures cover the period from May 30 through Saturday.

June's results were inflated by a late Memorial Day weekend, which lifted results by one percentage point last month and deflated May by the same amount, according to Mike Niemira, chief economist at ICSC.

After ramping up spending surprisingly in the first quarter, shoppers have hunkered down since April, going out to stores only to buy necessities. The volatile economic environment has made business choppy from week to week, and economists don't see that changing until American businesses start making significant hiring.

"We are growing in fits and starts," said Niemira. "Right now, if we don't get employment growth, it will continue to be choppy, and worry will grow."

As merchants reported their results yesterday, it was hard to discern clear trends. But department stores like Macy's and JC Penney Co. fared much better than mall clothing chains as they focus on exclusive merchandise, analysts said. Many teen merchants, including American Eagle Outfitters Inc., The Buckle Inc., Hot Topic Inc. and The Wet Seal Inc., reported decreases in revenue.

On the other hand, discounters like Target Corp. had small sales gains as their low- to mid-income consumers are feeling even more squeezed than a year ago because of high joblessness and tight credit, says Sherif Mityas, a partner in the retail practice at management consultant A.T. Kearney. Another factor is that Wal-Mart Stores' stepped-up discounting has also hurt low-price rivals like Costco Wholesale Corp.

Wal-Mart stopped reporting its figures on a monthly basis last year.

Such volatility mirrored how retail stocks were trading yesterday, with the losers being teen stores and discounters and the winners being department stores. Penney's shares rose almost seven percent, but American Eagle Outfitters' stock was down almost five percent. Target's shares slipped almost two percent.

June is a time when stores clear out summer goods to make room for back-to-school merchandise. But analysts say discounting was heavier than expected as stores had to work hard to pull in shoppers. Such discounting resulted in some stores, including American Eagle Outfitters and Wet Seal, trimming profit forecasts yesterday.

Scott Bernhardt of weather research firm Planalytics noted that sweltering heat in the East Coast drove customers to air-conditioned malls, but shoppers only focused on small items like sandals and tops, not big-ticket purchases like dresses.