Retail Sales Drop 0.1% in November as Caution Reigns
In a fresh sign of how tight holiday shoppers’ pocketbooks have gotten, the federal government reported Thursday that retail sales fell 0.1% in November from the month before.
The retail sales total, at a seasonally adjusted $151.6 billion, was up 3.4% from weak November, 1989, results. But with inflation running at more than 6% this year, it means that most merchants are doing less--or no more--business than in 1989.
“It’s not what a number of retailers were looking for, but we have to understand that we’re probably in a recession,” said Rosalind Wells, chief economist of the National Retail Federation trade group. She called the sales total “a recession-type number.”
Even so, the Commerce Department figures were better than many economists expected, given the weak sales reports released by major retailers last week. A Dow Jones survey had forecast a monthly decline of 0.9%.
Also, car sales--which depressed the November retail sales total--staged a big, though possibly misleading, rebound in early December, auto makers reported Thursday.
The figures, however, did little to change the growing opinion that the economy has sunk into a recession and that consumers have grown increasingly cautious. Retailing analysts predicted that department stores and specialty shops will enjoy a surge of business in the days before Christmas, but not enough to turn around what so far has been a dismal holiday shopping season.
They also said that, to drum up business, more retailers will follow such giants as Sears, Roebuck & Co. and Toys R Us in offering more and deeper price cuts on holiday merchandise.
The weak figures reported by the Commerce Department were blamed on worries about the Persian Gulf crisis, rising unemployment, declining consumer confidence and rising energy prices.
“Most Americans are laying out so much more money at the gas pump and on home heating oil that their discretionary buying power is substantially reduced,” said Kurt Barnard, publisher of the Retail Marketing Report newsletter.
“There’s a strong feeling across the country that it’s more prudent so save financial resources than to spend them.”
“People are going to buy less than they did in the past year, and they’ll spend less on what they will buy,” Barnard added.
One of the likely results: more retailing bankruptcies, said Carl Steidtmann, chief economist for the retail consulting firm Management Horizons. Along with the companies burdened with junk bond debts, he said, the list of failures likely will include retail chains that simply can no longer make enough money to stay afloat.
The retail sales drop, following a revised 0.2% gain in October, was the first monthly decline since May.
Among the few comparatively bright spots was the apparel specialty store category, where sales were up 0.8% from October and 2.3%--before accounting for inflation--from a year ago. Gasoline dealer sales climbed 0.7% from October and 21.6% from a year earlier, largely as a result of increased prices amid the Persian Gulf crisis.
Drugstore sales also climbed, up 0.2% from October and 8.4% from November, 1989. Furniture sales rose 0.3% from October, but were down 1.7% from last November.
Much of the weakness came at home improvement stores, where seasonally adjusted sales totals were down 2.6% from October and 5.2% from a year ago. At department stores, seasonally adjusted sales fell 0.2% from October but rose 1.1% from a year ago.
Auto sales, a major component of the government figures, were down 1.3% from the month before and little changed from a year ago. Eliminating the auto sales category, retail sales in November posted a 0.2% gain from October and a 4.3% increase from November, 1989.
Separately, the 10 companies producing cars and trucks in the United States reported a 22.3% sales increase during the first 10 days of December, versus the same period last year.
But analysts and auto executives said the increase, coming while U.S. auto makers are cutting production and losing money, does not reflect the true weakness of the market.
“Last year’s period was extremely weak,” said Joel Pitcoff, a sales analyst at Ford Motor Co. “It was a worse 10-day period than anything we’ve seen this year.”
Car sales were up 27.8%, and truck sales rose 14.3% from last year. The Big Three auto makers reported a 29.3% sales increase in domestically made cars, while sales of Japanese “transplants” increased 14.2%.
“It’s somewhat refreshing that the number wasn’t as bad as the 10-day period that ended out November,” said Clifford Swenson, an economist at Economic Planning & Consulting in New York. But when late November’s weak showing is averaged with early December’s, Swenson said, “the figure is right in line with the overall trend in the market, which for the fourth quarter is fairly extreme weakness. And that extreme weakness should persist at least for the next couple of months.”
Luxury car sales--widely expected to show a sharp increase before the 10% excise tax on cars costing more than $30,000 begins Jan. 1--failed to meet expectations, dealers and analysts said.
Americans bought 137,024 U.S.-built cars Dec. 1 to 10, a 28% rise. This included a 29% gain at General Motors and a 32% increase at Ford. Chrysler sales climbed 25%.
Among Japanese-based manufacturers, only Honda posted a decline, a drop of 32%. Mazda rose 105%, Nissan 81%, Toyota 47% and Mitsubishi 35%.
Times researcher Amy Harmon in Detroit contributed to this report.
VEHICLE SALES
Dec. 1-10 % change 1990 year to year GM* 99,399 +22.2 Ford* 75,114 +32.5 Chrysler* 32,246 +4.7 Honda U.S. 3,821 -31.6 Mitsubishi U.S. 875 +35.0 Nissan U.S.* 3,006 +49.1 Toyota U.S. 4,628 +47.4 Mazda U.S.* 1,186 +147.1 Subaru U.S. 347 ** Isuzu U.S.* 370 ** TOTAL 220,992 +22.3
*Includes light truck sales.
**No comparison possible.
There were 8 selling days in the selling period this year and last year.
