Auto Sales Drive Retail Results for December
A rush by consumers to buy discounted cars boosted retail sales in December, which was otherwise marred by fears of more job cuts and a war with Iraq, a government report Tuesday showed.
The Commerce Department said retail sales rose 1.2% last month to a seasonally adjusted $308 billion, while sales for the whole of 2002 posted the smallest gain in at least nine years.
Excluding autos and parts, December sales were flat, confirming that consumers curbed spending, leaving retailers with the most disappointing holiday shopping season in years.
Although the key holiday season was soft, retailers have seen modest gains in sales so far this year, according to the latest weekly data.
For the year as a whole, overall retail sales advanced 3.4%, the smallest annual gain since Commerce began releasing the data in that form in 1993.
In December, sales for motor vehicles and parts rose 5%, after gaining 2.6% in November. Economists attributed this surge to cheap financing deals automakers have been offering to lure buyers.
These generous incentives, including cash rebates and interest-free loans, helped make 2002 the fourth-best year on record for U.S. auto sales and provided a pillar of support for the shaky economy.
Although boosting sales of cars and trucks -- which account for about one-fifth of U.S. retail sales overall -- the incentives hurt the profits of automakers.
Sales fell at department, building supply and food and beverage stores in December. They were up at gasoline stations, reflecting gasoline prices, and at clothing stores and health and personal care outlets.
Economists said the slow holiday season took its toll on an already soft job market. Unexpectedly weak hiring in the period contributed to a 101,000 slide in December payrolls outside the farm sector, the Labor Department said last week.
Even with the possibility of war with Iraq, Americans still are spending. U.S. chain store sales edged higher last week, the latest data show, but consumer traffic at malls remained slow.
