U.S. October Retail Sales Fell 0.1%; Ex-Autos Increase 0.9%
U.S. October Retail Sales Fell 0.1%; Ex-Autos Increase 0.9%
Nov. 15 (Bloomberg) -- Sales at U.S. retailers fell 0.1 percent last month as consumers bought fewer cars and spent less on gasoline to run them.
The October decline, which was restrained by strong chain- store sales, followed a revised 0.3 percent increase in September, the Commerce Department said today in Washington. Excluding autos, sales rose 0.9 percent after a 1.4 percent gain the prior month.
Auto sales slowed last month after buyer incentives ended, and service station receipts fell as cheaper crude oil pushed gasoline prices lower. Sales of building materials, clothing and furniture rose in October and may accelerate as the holiday season approaches provided fuel prices stay below their September highs, economists said.
``It's all vehicle sales and gas,'' Diane Swonk, chief economist at Mesirow Financial Inc., said of the October sales decline, before the report. ``Chain-store sales were relatively strong during the month, suggesting consumers diverted their vehicle spending to other sectors. We also had a cold snap which prompted early spending on winter wear.''
Economists expected a 0.7 percent decrease in retail sales in October, the median forecast of 66 estimates in a Bloomberg News survey, after an originally reported 0.2 percent increase in September. Forecasts ranged from a 1.5 percent decline to an increase of 0.2 percent.
Retail sales excluding automobiles were expected to rise 0.3 percent in October after an initially reported 1.1 percent gain. Estimates ranged from a decrease of 0.1 percent to a gain of 0.8 percent.
Retail sales account for almost half of all consumer spending, which in turn accounts for more than two-thirds of the economy.
Demand
Consumer demand ``remains relatively steady as we head into the holiday season,'' Michael Niemira, chief economist at the International Council of Shopping Centers, said in a statement.
Retail sales excluding autos and gasoline rose 1.1 percent.
Sales in the retail group used to calculate gross domestic product figures for consumer spending, which exclude autos, gasoline and building materials, rose 1 percent in October after a 0.7 percent September increase. The government uses data from other sources to calculate the contribution from the three categories excluded.
The gains suggest consumer sentiment may be rebounding after hurricanes battered states along the Gulf Coast in August, September and October. The storms claimed more than 1,275 lives, caused insured losses of as much as $77 billion and disrupted energy production and supplies.
Sales at electronics and appliance stores rose 0.4 percent, in October while furniture sales increased 0.7 percent.
Furniture
``People who weren't directly affected by the hurricanes are recovering from the angst of watching it from afar and they're spending again,'' said Robert Batt, executive vice president of Nebraska Furniture Mart, a unit of Berkshire Hathaway Inc., the Omaha, Nebraska-based holding company owned by billionaire investor Warren Buffett. ``Gas prices came down in October and business was terrific.''
Sales of flat-screen televisions at Nebraska Furniture Mart rose 400 percent in October from a year earlier. ``They're the biggest item driving the electronics business right now,'' Batt said. ``Everyone seems to be buying them.''
Purchases at sporting goods, hobby, book and music outlets increased 0.6 percent in October while sales at food and beverage stores rose 0.7 percent. Sales at restaurants and drinking places rose 0.9 percent.
Non-store retailers, which include online purchases and catalog sales, increased 1.2 percent in October after a 0.1 percent gain a month earlier.
General Merchandise
Sales at general merchandise stores, which include department stores, climbed 1.2 percent last month after increasing 0.8 percent in September. Sales at clothing and accessory stores rose 3.1 percent, the most in three years, after a 0.3 percent decrease.
``The store data looks pretty strong,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut.
A measure of national retail sales released yesterday by MasterCard showed October sales excluding autos rose 0.6 percent, the company said.
Consumer spending supported the economy in the third quarter, with U.S. gross domestic product growing 3.8 percent at an annual rate. A survey of 63 economists by Bloomberg News earlier this month produced a median estimate of 3 percent growth for the fourth quarter and a 1.5 percent expansion in consumer spending, the slowest pace in three years.
Economic Growth
Retail sales may contribute more to economic growth in the fourth quarter if the weather remains unseasonably warm, damping the impact of high heating bills, economists said.
Chain-store sales profited from the weather last month as a cold snap from Oct. 22 to Oct. 29 spurred purchases of winter clothing. Mild temperatures the rest of the month produced the 17th warmest October on record, according to the National Climactic Data Center.
The warm weather cut consumption of home heating oil and natural gas, which may cost some households as much as $500 more this winter, according to the U.S. Department of Energy. Prices of natural gas and home heating oil surged after the first two hurricanes.
``We avoided the sticker shock from high heating bills in October because it was so warm,'' said John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina. ``If it stays warm through Thanksgiving, we should have a good holiday shopping season.''
Wal-Mart Stores Inc., the world's largest retailer, recorded a 3.9 percent increase in October sales at its main chain of discount stores and supercenters compared with a year earlier, said Pauline Tureman, Wal-Mart's director of investor relations. Wal-Mart still had 12 stores closed due to the hurricanes Nov. 3.
Shopping Centers
Lower gasoline prices supported a 4.4 percent increase in same-store sales in October from a year earlier, according to the International Council of Shopping Centers. The New York- based trade group expects a gain in same-store sales of 3 percent to 3.5 percent for November and December combined that would exceed last year's increase of 2.3 percent.
Purchases from dealers of building materials and garden supplies showed a 2.1 percent increase in sales last month following a 1.7 percent gain in September.
Falling gasoline prices helped consumer confidence rebound from a 13-year-low this month in a preliminary survey by the University of Michigan, suggesting consumer sprits are rebounding after the hurricanes.
Sales at filling stations fell 0.8 percent last month after a 5.1 percent rise as the average price at the pump for all grades of gasoline fell to $2.77 a gallon in October from $2.95 a gallon in September, according to figures from the Energy Department. The price declined to $2.42 a gallon in the week ended Nov. 7, the lowest since August.
Autos
Auto sales fell as buyer incentives ended. Purchases at automobile dealerships and parts stores dropped 4.1 percent last month after slumping 3.9 in September.
Total U.S. vehicle sales fell to a seven-year-low of 14.7 million units at a seasonally adjusted annual rate in October from 16.4 million the prior month.
Affluent consumers are spending more than most. Luxury department stores increased sales 7.3 percent in October from a year earlier, according to the shopping center council.
``As things get colder and heating bills build up, it's going to come right out of discretionary spending, which will impact less affluent consumers more,'' said Joshua Shapiro, chief U.S. economist at MFR Inc., a New York consulting firm. ``For the wealthy, it's an inconvenience rather than a lifestyle change.'' -- With reporting by Andy Burt in Washington. Editor: Abruzzese
To contact the reporter on this story: Victor Epstein in Washington vepstein@bloomberg.net.
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