Tuesday, October 29, 2013 10:15 am
Outside drop in autos, US retail spending rises
By CHRISTOPHER S. RUGABERAP Economics Writer
Overall retail sales dipped 0.1 percent, the Commerce Department said Tuesday. That was the weakest showing since March.
Auto sales fell 2.2 percent, the largest decline since October 2012. But the drop occurred largely because the sales calendar pulled Labor Day weekend activity into August, automakers have said. That means the drop was likely temporary.
Excluding autos, gas and building supplies, sales rose 0.5 percent in September, up from 0.2 percent in August. Economists exclude those categories because they tend to be volatile.
Outside of autos, nearly all retailers reported higher sales, including furniture stores, electronics and appliance retailers, and grocery stores. Sales at clothing stores and department stores were the only others aside from autos to decline.
Retail sales are closely watched because they're the government's first report each month on consumer spending, which accounts for 70 percent of U.S. economic activity.
Americans have increased their spending modestly this year. But slower job growth and minuscule pay raises could make them less inclined to open their wallets.
Consumer confidence fell in September to a four-month low, according to the Conference Board. In addition to a weaker job market, higher interest rates and a drop in stock prices may have also weighed on Americans' outlook.
The Conference Board will release the October consumer confidence report on Tuesday as well. Economists expect it will fall even further, reflecting concerns last month about the partial government shutdown.
Employers added an average of just 143,000 jobs a month from July through September. That's down from 182,000 a month from April through June and 207,000 in the first three months of the year.
Sluggish spending is likely to weigh on growth. Most economists predict growth slowed in the July-September quarter to an annual rate of about 1.5 percent to 2 percent, down from a 2.5 percent rate in the April-June quarter. And the shutdown is likely to keep growth at a sluggish pace for the final three months of the year.
The retail sales report was delayed by the shutdown. It was originally scheduled to be released Oct. 11.