Retail Sales Rise Slightly; Wholesale Prices Steady : Spending Seen Likely to Slow in Early ’88

Retail sales rose a lackluster 0.2% in November, the first full month after the stock crash, the government said Friday.

Retail sales rose to a seasonally adjusted $125.86 billion, up $210 million from October.

But that modest gain follows sharp drops of 0.9% in October and 1.7% in September. Both figures were revised down from earlier estimates.

November sales were 3.4% higher than a year earlier, well below the 4.8% rate of inflation in consumer prices so far this year.

“Since September, retail sales actually declined by one full percent over the previous three-month period,” said Richard W. Rahn, chief economist of the U.S. Chamber of Commerce.

Economists differed over what part the stock market crash played in November’s sales. Because consumer spending accounts for about two-thirds of overall economic activity, they are watching closely for any signs it is being dampened by the stock market.

“Overall I think these numbers are encouraging. They certainly suggest we’re not in for a recession early next year,” said David Wyss, chief financial economist of Data Resources Inc. of Lexington, Mass.

Apparel Increase Discounted

An 0.5% increase in clothing sales “suggests the consumer hasn’t put away his charge cards after the Oct. 19 (stock market) crash,” he said.

But, Michael K. Evans, a private economist in Washington, discounted the increase in apparel sales because clothing prices have been rising even faster. Also, he said, a 0.6% decrease at department stores was “the first piece of conclusive evidence that consumers really did cut back after the crash.”

Analysts said the November report likely did not reflect Christmas buying. Thanksgiving, the traditional start of the holiday shopping season, fell later in November than usual.

Jay Levy, of Levy Economic Forecasts in Chappaqua, N.Y., suggested consumers were postponing Christmas shopping until later in the season because many “sense that stores are selling into a buyers’ market.”

“Consumers are gradually retrenching but are committed to having a decent Christmas,” said Jerry Jasinowski, chief economist of the National Assn. of Manufacturers. “I think you can expect retail sales to plummet after the first of the year as consumers seriously get back to the retrenching they started in September.”

Auto Sales Down

Excluding automobiles, sales rose 0.4% in November after edging down 0.1% in October.

Car sales, which have been dropping since dealers phased out end of the model year incentives, declined 0.5% last month, compared to a sharp 3.5% drop in October.

“Auto sales were hit early; they can’t go down much further,” Evans said.

For November, sales of durable goods--big ticket items expected to last three years or more--rose 0.4%, compared to a 2.6% drop in October.

Sales of non-durable goods showed no change overall, compared to a 0.2% rise a month earlier.

The Commerce Department offered these details of sales for November:

- Hardware and building supplies rose 2% on top of a 0.5% increase a month earlier. Wyss attributed that to unseasonably good weather.

- Furniture and home furnishings fell 0.8% after a 1.1% drop in October.

- General merchandise stores, which includes the department store subcategory, dropped 0.3%, compared to a 0.7% rise in October.

- Gasoline station sales edged down 0.1% after a 0.8% decline a month previous.

- Clothing was up 0.5%, reversing a previous 0.2% decline.

- Restaurant and bar purchases rose 0.5% after an earlier 0.8% rise.

- Grocery and other food stores were unchanged after a 0.3% increase.

- Drug stores posted a 1% increase on top of an earlier 0.5% rise.