Retail Sales Up 0.7%; Best Rise in 4 Months : Auto Sector Credited for December Increase

Retail sales rose 0.7% in December, the biggest increase in four months, on the strength of an increase in auto sales, the government said Thursday.

The Commerce Department said retail establishments sold $126.7 billion worth of goods in December, up $900 million from November. The figures are adjusted for seasonal variations, but not for inflation.

The December gain followed a scant 0.1% increase in November and drops of 0.9% in October and 1.7% in September. It was the steepest climb since August, when sales rose 1.5%, spurred by incentives at automobile showrooms.

Despite the year-end spurt, retail sales for all of 1987 were up just 3.5%, the smallest annual gain since a 2.8% rise in the recession year of 1982. Sales totaled $1.51 trillion.

Sales rose 5.4% in 1986, 7.2% in 1985, 10% in 1984 and 9.5% in 1983. Using 12-month totals of unadjusted figures, the year-to-year increases were 2.9% in 1982, 9.5% in 1983, 10.1% in 1984, 7% in 1985, 5.4% in 1986 and 3.5% in 1987.

Economists had been watching retail sales, particularly Christmas sales, for any sign that the October stock market crash dampened consumer confidence.

Decent Holiday Season

Major department stores, in a separate report last week, said heavy discounting brought last-minute shoppers into the stores after a slow start.

The government said Thursday that sales at department and other general merchandise stores fell 0.4% when adjusted seasonally compared to November, but were 5% more than December, 1986.

Under Secretary of Commerce Robert Ortner said: “It appears (retailers) had a decent selling season this Christmas.”

The sales didn’t pick up as much as usual from November to December, so on a seasonally adjusted basis, they were down, he said. But the comparison to a year earlier suggests “a modest gain in real volume,” he said.

“It would appear that the stock market crash was a non-event, self-contained on Wall Street, in my opinion where it should remain, both in terms of cause and effect,” he said.

Michael K. Evans, president of a Washington-based forecasting service, said the earlier report from major department stores, compared to the government’s figures today, was either overly optimistic or an indication that major department stores are gaining market share over small specialty stores.

Cites Economic Factors

“I think these guys (department store retailers) are whistling past the graveyard. They wanted to put an optimistic gloss on reports to keep up confidence, but the (government’s) figures suggest that’s not warranted,” he said.

He said the soft retail sales can be attributed to “ordinary economic factors” and not the crash. He attributed the increase in auto sales in December to renewal of sales incentives by domestic car makers.

Car sales shot up 2.4% in December, showing signs of recovery from the fall slump that followed the expiration of dealer incentives at the end of the summer. Auto sales were down 0.7% in November.

Excluding autos, retail sales rose 0.2% in December, following a 0.3% rise in November.

For December, sales of durable goods, big ticket items expected to last more than three years, were up 1.7% after inching up 0.2% a month earlier.