Retail Sales Barely Rise, Pointing to Gloomy Christmas

Retail sales managed an anemic 0.1% gain in October, the Commerce Department reported Wednesday, and betting is heavy that the all-important Christmas shopping season will be a washout.

“There wasn’t much Christmas cheer in those numbers,” said Allen Sinai, chief economist with Boston Co., a New York-based investment firm. “It shows that consumers are hunkering down.”

Fueled by higher gasoline prices, retail sales totaled $152.3 billion in October, compared to $152.1 billion in September, the Commerce Department said. If cars, trucks and automobiles are not counted, retail sales were unchanged in October. If gasoline sales are removed, retail sales actually dropped 0.1%.

When adjusted for inflation, Sinai said, retail sales for the month were down 0.5%.

In September, retail sales increased 1.3%. October sales were 4.9% higher than a year ago.

Separately, automobile manufacturers said Wednesday that U.S. vehicle sales rose 2.4% in early November, despite a drop in sales of light trucks. The total of cars and trucks sold from Nov. 1 through Nov. 10 was 241,357, up from 235,750 in the period last year, one of the weakest sales periods of 1989.

The government retail sales report for October showed weakness in several sectors, including home furnishings, department stores and apparel, said Alison Lynn Reaser, vice president and senior economist for First Interstate Bank in Los Angeles. “It appears people may be cutting back even on eating out,” she said.

Although the dollar volume of automobiles sales was up in October, the actual number of units sold was down, she said.

Bright notes in the report were a 1.5% rebound in building materials, which had fallen 1.5% in September, and a 1.6% boost in drugstore purchases on top of a 0.9% gain in September. Gasoline sales jumped 3.2%, reflecting higher oil prices since Iraq invaded Kuwait in August.

October sales of durable goods--things such as cars and refrigerators that are expected to last longer than three years--rose 0.7%. Non-durable goods sales slipped 0.2%.

Department store sales fell 0.6% despite heavy discounting and advertising. Clothing store sales dropped 1% while furniture stores saw a 0.3% decrease. Automotive dealerships reported a 0.7% gain.

Sales were off 0.5% at food stores and 0.3% at restaurants. All the Commerce Department statistics are adjusted for seasonal variations.

Retailers probably will continue special promotions and sales this year, Reaser said. Many stores earn half their annual profits during the Christmas season.

“Consumers probably can find some fairly good bargains, so that’s good news,” she said. “But it’s going to be the most difficult year the retail industry has had since the last recession.”

VEHICLE SALES

Nov. 1-10 % change 1990 year to year GM* 106,639 +7.4 Ford* 78,569 +4.7 Chrysler* 33,431 -21.3 Honda U.S. 9,609 +29.3 Mitsubishi U.S. 1,048 +6.7 Nissan U.S.* 3,831 -12.2 Toyota U.S. 6,028 +7.7 Mazda U.S.* 1,121 +111.5 Subaru U.S. 347 ** Isuzu U.S.* 734 ** TOTAL 241,357 +2.4

*Includes light truck sales.

**No comparison possible.

There were 9 selling days in the selling period this year and last year.