Retail sales in U.S. drop for first time in four months

Retail sales fell in October as American consumers pulled back after a three-month shopping spree and Superstorm Sandy slammed into the East Coast, shutting malls and auto showrooms.
The 0.3 percent drop followed a 1.3 percent increase in September that was larger than previously reported, Commerce Department figures released on Nov. 14 showed. While it was able to collect information from the affected area, the agency said it couldn’t quantify the impact of the biggest Atlantic storm.
Companies such as General Motors Co. and Ford Motor Co. said last month’s storm-related sales slump will probably reverse as brighter job prospects, rising home prices and sturdier finances boost household confidence. At the same time, last week’s report showed Americans bought fewer nonessentials, which may reflect mounting concern over possible tax changes and limited wage growth that pose risks for the biggest part of the economy.
“Some of it is due to the hurricane taking away some discretionary sales,” said Jonathan Basile, director of U.S. economics at Credit Suisse in New York. “Spending still seems subpar, and consumers are facing headwinds on their paychecks and incomes.”
Other reports last week showed U.S. wholesale prices unexpectedly dropped in October and inventories climbed in September.
The decline in wholesale prices was led by falling fuel and vehicle costs. The producer-price index dropped 0.2 percent last month after rising 1.1 percent in September, according to Labor Department data.
The median forecast of 83 economists surveyed by Bloomberg for October retail sales called for a drop of 0.2 percent. Estimates ranged from a decline of 1.2 percent to an advance of 0.6 percent. The September reading was revised from an initially reported 1.1 percent gain. The Commerce Department said it received responses from 2,579 retailers last month, within the 12-month range of 2,517 to 2,781.
“Even though we cannot isolate the effect, we did receive indications from the companies that the hurricane had both positive and negative effects on the retail sales data,” the Commerce Department said in a statement.
Eight of 13 major categories showed a decline last month, led by auto dealers and building-material stores. Service- station sales and food purchases jumped.
Sales decreased 1.5 percent at automobile and parts dealers after a 1.7 percent gain the prior month. Industry figures showed sales fell to a 14.2 million pace in October after Sandy struck during the auto industry’s busiest time of the month. Carmakers said those sales should be made up by the end of the year.
Retail sales excluding autos were little changed. They were projected to rise 0.2 percent, according to the Bloomberg survey median.
Several retailers reported a pickup in October demand despite the storm. Same-store sales at Macy’s Inc., the second-biggest U.S. department-store chain, rose 4.1 percent, topping the 4 percent average estimate of analysts surveyed by Retail Metrics Inc. Kohl’s Corp.’s same-store sales climbed 3.3 percent, beating estimates for a 0.8 percent gain.
As the holiday shopping seasons begins, Hasbro Inc.’s retail customers are “looking forward to a good year,” David Hargreaves, chief operating officer of the Pawtucket-based toymaker, said during a call with analysts on Oct. 22. “Certainly consumer demand has held up pretty well. I think they’re sort of cautiously optimistic.” •

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