Retail steady, despite car-sale lag

Decreased purchases at auto dealers drop total by 0.1%

A man enters a TJ Maxx store last week in Cincinnati. The Commerce Department said Tuesday that retail sales climbed in September.
A man enters a TJ Maxx store last week in Cincinnati. The Commerce Department said Tuesday that retail sales climbed in September.

Retail sales in the U.S. outside of auto dealers climbed in September, indicating households were sustaining the economic expansion before the government shutdown shook confidence.

The 0.4 percent gain in purchases excluding vehicles followed a 0.1 percent increase in August and matched the median forecast of economists surveyed by Bloomberg, the Commerce Department reported Tuesday. Total sales dropped 0.1 percent, restrained by the biggest decrease at auto dealers since October 2012, as purchases early in the month were included in the August data.

Americans snapped up the newest cellphones and video games last month as low borrowing costs and rising household wealth backed by improving home and stock prices gave them the wherewithal to sustain demand. At the same time, the partial closing of federal agencies may have upended spending this month as consumers grew increasingly concerned it would hurt the world’s largest economy.

“Consumers continue to hold in despite all the uncertainty going into the shutdown,” said Millan Mulraine, director of U.S. rates research at TD Securities USA LLC in New York, who accurately projected the gain in sales excluding autos. “We ended the quarter on a fairly solid note. Whether this buoyancy can be sustained remains a question after the hit to consumer confidence from the shutdown.”

Total retail sales were projected to be unchanged, ac-cording to the median forecast of 86 economists surveyed by Bloomberg. Estimates in the Bloomberg survey ranged from a 0.3 percent drop to a gain of 0.6 percent.

Nine of 13 major categories showed increases last month, led by a 0.7 percent advance at electronics dealers, the biggest since April, and 0.9 percent gains at both grocery stores and restaurants.

Sales dropped 2.2 percent at automobile dealers, after a 0.7 percent increase the prior month, according to Tuesday’s report.

Vehicle demand remains a bright spot even though a quirk in the industry calendar hurt sales last month, data show. Cars and light trucks sold in September at a 15.2 million annual pace, down from an almost 6-year high of 16 million the prior month, according to data from Ward’s Automotive Group. Deliveries for the first two days of September, including the Labor Day holiday, didn’t contribute toward automakers’ tallies because they were counted in August figures.

Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. reported U.S. sales declines last month, with fewer weekend selling days and tight supplies of some models after August’s surge. General Motors Co. and Ford Motor Co. said earlier this month that the government shutdown posed a threat to an already slow economic recovery.

Areas showing weakness last month included clothing stores, where demand dropped 0.5 percent, Tuesday’s report showed. Receipts at service stations were little changed.

Excluding autos, gasoline and building materials, which render the figures used to calculate gross domestic product, sales increased 0.5 percent after a 0.2 percent gain in the previous month. A separate category known as the control group, that also excludes such sales as food services, rose 0.4 percent last month.

Purchases of electronics were probably spurred by the Sept. 20 release of Apple Inc.’s two new iPhones models. The company sold a record 9 million iPhones in the weekend debut.

Retailers may have also benefited from the surge in purchases of video games.

Some companies project demand will pick up in the November-December Christmas shopping season after a lull this month. United Parcel Service Inc., the world’s largest package-delivery company, said it expects daily shipping volumes to rise 8 percent during the peak shipping period between the Thanksgiving holiday on Nov. 28 and Christmas.

“Looking to the fourth quarter, although some major retailers have expressed caution about holiday spending, they still expect robust online sales,” Kurt Kuehn, UPS’ chief financial officer said in a separate earnings release.

Business, Pages 25 on 10/30/2013

Upcoming Events