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U.S. Retail Sales Up in September
Oct 18, 2004
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Sales at U.S. retailers rose 1.5 percent in September, the most in 6 months, led by spending on automobiles and general merchandise.

The biggest rise in receipts at automobile dealerships since October 2001 paced the increase in all retail spending last month, which followed a revised 0.2-percent decrease in August, the Commerce Department said. Excluding autos, sales rose 0.6 percent, twice the expected rate, after rising 0.2 percent in August.

General Motors Corp. and Ford Motor Co. were among automakers to attract customers with special financing and price breaks last month to help clear dealer lots. Rising energy costs, coupled with subdued job gains, may pressure incomes and limit the pace of the expansion in the final 3 months of 2004 after a third-quarter rebound.

"The consumer has always been a source of stability," said Steven Wieting, a senior economist at Citigroup Global Markets Inc. "But, we have to remember that the very strong pace of spending in the third quarter came in a period when energy costs were stabilizing. We are going to get hit again in the fourth quarter."

Economists expected retail sales would rise 0.7 percent last month after a previously reported drop of 0.3 percent in August, based on the median forecast of 72 estimates in a Bloomberg News survey. Sales excluding automobiles were expected to rise 0.3 percent after rising 0.2 percent in August.

Retail sales account for almost half of all consumer spending, which in turn, accounts for about two-thirds of the economy.

Sales at automobile dealerships and parts stores rose 4.2 percent last month after falling 1.3 percent. Sales at general merchandise stores, which include department stores, rose 1.1 percent last month, the most since February, after falling 0.3 percent in August. Sales at clothing and accessory stores rose 0.8 percent after dropping 0.7 percent. Department stores sold 0.9 percent more merchandise than the month before.

Sales at electronics and appliance stores rose 0.5 percent, while furniture sales fell 0.4 percent. Purchases at sporting goods, hobby, book, and music outlets decreased 0.4 percent while sales at food and beverage stores rose 0.5 percent. Sales at restaurants and drinking places rose 0.7 percent after dropping 0.5 percent a month earlier.

The rising cost of gasoline and other forms of energy poses a threat for the economy in coming months as it siphons money from consumers' pockets, causing spending on other goods and services to slow. The average retail price for all grades of gasoline rose to $2.04 a gallon in the week that ended Oct. 11, the highest in four months, according to figures from the Energy Department. The price reached a record $2.10 a gallon in May.

Consumer spending is projected to grow at a 3.1 percent annual pace this quarter compared with a 4 percent rise forecast for the third quarter, according to the median forecast of economists surveyed in a separate Bloomberg News survey earlier this month. The slowing will cause the economy to cool to a 3.8 percent pace of growth this quarter from 4 percent, the survey showed. (Bloomberg)

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