October 15, 2009 in Business

Modest gains in retail

September sales hike excludes automobiles
Ylan Q. Mui Washington Post
 

WASHINGTON – Auto sales dried up in September, but Americans spent more money on food, gas and furniture than they did in August, according to new government data – a small step on the long road to economic recovery.

Over the summer, consumer spending was boosted by the government’s popular “cash for clunkers” program, which gave buyers up to $4,500 toward the purchase of new, fuel-efficient cars. But that incentive ended in August, and auto sales plunged 10.4 percent in September, according to data released Wednesday from the U.S. Commerce Department. That dragged total retail sales down 1.5 percent, the biggest monthly drop so far this year.

But shoppers remained resilient. Retail sales excluding autos rose 0.5 percent in September compared to the previous month.

“It’s mildly encouraging,” said Paul Dales, U.S. economist for Capital Economics. But he cautioned that “it’s nothing more than a sideways-moving trend. There doesn’t seem to be an upward momentum.”

Though the increase is far from robust growth, it is also an improvement over the dramatic declines a year ago, when September sales declined 1.02 percent, followed by 2.3 percent in October. Retail sales have stabilized as shoppers and stores adjust to the “new normal” of frugality and value.

The biggest gain in September came at furniture stores, where sales rose 1.4 percent from the previous month, and gasoline stations, which increased 1.1 percent. Sales at general merchandise stores, which includes discounters, grew 0.9 percent.

Outside of autos, miscellaneous retailers such as pet stores suffered the largest drop, 1.9 percent. Building and home improvement stores fell 0.2 percent.

Rosalind Wells, chief economist for the National Retail Federation, a trade group, said last month’s growth was driven by cooler weather and by back-to-school spending, which trickled into September this year because many schools opened later.

But she also attributed it to “a little better feeling about the economy on the part of consumers.” Still, Wells cautioned that such glimmers remain dim. The National Retail Federation, whose analysis excludes sales at restaurants and gas stations, reported a 0.5 percent increase.

“It’s one month, and one month does not a trend make,” she said. “You’re still going to see some reluctance on the part of consumers to spend a lot.”

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