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Auto sales fall Original Source Link: (May no longer be active)
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Retail Sales Fall in Sept. as Autos Slide
Fri Oct 11, 9:13 AM ET
By Jonathan Nicholson
WASHINGTON (Reuters) - Weak car sales sent total U.S. retail purchases down sharply in September, the Commerce Department (news - web sites) said on Friday in a report likely to fan fears about the strength of the economy's lifeblood, consumer spending.
Overall retail purchases fell 1.2 percent in the month to a seasonally adjusted $302.46 billion. Much of the greater-than-expected drop was due to auto sales, which fell despite financing incentives from automakers.
Excluding autos, the report was less bleak, with sales rising 0.1 percent, in line with expectations. The overall drop in September was the largest monthly decline since November 2001's 2.6 percent slide.
Retail sales make up about 40 percent of total consumer spending, which in turn accounts for two-thirds of economic activity.
While spending has been strong in the third quarter, aided by continued income gains and mortgage refinancings, analysts worry war jitters, a related spike in oil prices and weeks of declines in stock markets will sap its strength ahead.
Financial markets apparently focused on the positive reading for sales excluding automobiles. Bond prices eased slightly after the report's release as analysts noted the figures suggested the U.S. economy was still holding up while stocks were expected to tick higher at the open.
Joseph Battipaglia, chief investment office for research firm Ryan, Beck & Co., said the slight pickup in the non-auto sales data was encouraging.
"That tells us the U.S. economy is not showing further signs of erosion," Battipaglia said. "Consumers, despite some concerns about the war with Iraq, are going about their normal business."
August sales were revised slightly to an overall gain of 0.6 percent and to 0.3 percent excluding autos. Previously, August sales had been reported up 0.8 percent and 0.4 percent ex-autos.
Analysts had been anticipating weakness in the September figures, as weekly reports from retailers for the month had also shown softness. In a poll of analysts by Reuters, the average forecast was for a 0.9 percent decline overall and a 0.1 percent increase outside the automotive sector.
Within the September report, gains were concentrated in only three areas -- building materials, health and personal care as well as sporting goods and bookstores.
Sales of building materials and garden equipment rose 1.8 percent, their biggest gain since April. Health and personal store sales and sales at sporting goods, hobby and bookstores were both up 1.5 percent.
The biggest sales decline was seen in the auto and parts category, which fell by 4.8 percent, the biggest drop since a 9.7 percent decline in November 2001.
Car sales zoomed ahead in August, rising 1.5 percent as automakers felt the impact of the re-introduction of generous auto finance incentives. But those lures did not appear as effective in September.
Other categories posting sharp declines in September included e-commerce and mail order retailers, who saw sales dip 1.0 percent, and clothing stores, which saw sales off by 0.9 percent in September.
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