Car Sales Decline but Retail Purchases of Other Goods Are Encouraging : Signals Mixed on Holiday Shopping Outlook
Apart from auto sales, the American consumer kept buying in October, evidently shaking off any immediate jitters from the stock market crash, the Commerce Department reported Friday.
All told, retail sales for the month declined 0.1%, the report said. But that decline was caused entirely by a 3.1% drop in car sales as summertime low-rate loans and other incentives came to an end. Excluding cars and trucks, October buying was up 0.7%, the largest such jump since last February.
While the Commerce Department’s retail sales survey covers the whole month, there were mixed signals on whether Friday’s report means that the Oct. 19 crash will have an impact on consumer habits during the holiday buying season.
Lawrence Chimerine, president of Wharton Econometrics in Bala-Cynwyd, Pa., a forecaster whose view of the future is seldom rosy, cautioned that it was far too soon to draw any firm conclusions.
“Most people don’t react that quickly,” he told the Associated Press. “If there’s going to be any reaction, it’s going to take several months. . . . The key will be November and December.”
But Sandra Shaber, an economist for the Futures Group, a Washington consumer products consultant, hailed the report as unequivocally good news--as far as it goes.
“The increase was very, very encouraging,” she said. “Everybody had been worried how the turmoil on Wall Street would affect consumers, and this and other indicators suggest that they are taking it in stride.” Shaber added, however, that some decline in spending toward the end of the year is almost inevitable. “We’re not out of the woods yet, and more turmoil in the markets could seriously erode confidence,” she said. “Right now, we see weaker consumer spending, but not a serious retrenchment.”
October’s reported 0.1% decline in all retail sales--including the expected 3.1% drop in cars and trucks--came after a 1.1% decline in September. The September figure was revised downward from an earlier reported 0.4% decline. The September revision included a 3.8% decline in automotive sales.
Even the decline in auto and truck sales apparently felt little influence from the market collapse. Most of the reported weakness was said to have occurred in the first 20 days of the month, with sales strengthening slightly in the final 10 days.
Automotive sales are highly volatile even in ordinary circumstances. Sales for October, as measured by the Commerce Department, were 2.7% higher than in October, 1986, while sales in September of this year, before the market crash, were 17.1% below the level of the previous September.
In other categories, Commerce reported that sales of furniture and home furnishings were up 1.6% after a 0.2% decrease in September. Sales at hardware and building supply stores increased by 1.7%, following a 0.7% uptick the previous month. Sales of non-durable goods rose 0.5%, reversing a 0.5% decline in September.
Sales at department and other general merchandise stores were up 1.3%, reversing a 1.1% September decline, while sales at grocery stores edged upwards by 0.2% after dropping 0.7% a month earlier. Sales rose 1% at clothing stores, 0.6% at restaurants and bars and 0.4% at drug stores, but gasoline station sales slipped 0.2%.
