Retail sales drop for 5th month, sentiment up
December 15, 2008 - 0:0
WASHINGTON (Reuters) -- Sales at U.S. retailers fell for a fifth straight month in November, the longest decline in at least 16 years, as gasoline sales tumbled by a record amount, according to government data on Friday.
Sales were down a much more modest 0.2 percent once gasoline sales were excluded as spending on other items, such as electronics, increased. But analysts said the consumer clearly was pulling back.""Although consumers are getting significant relief from lower gasoline prices, at this point they appear to be saving rather than spending the drop in their energy bills,"" economists at RDQ Economics said in a note to client.
Falling gasoline prices also helped U.S. consumer sentiment improve this month, as did retail discounts and ""tumbling"" inflation expectations, but pessimism over the future tempered any enthusiasm, the Reuters/University of Michigan Surveys of Consumers said.
The Commerce Department said total retail sales fell 1.8 percent to a seasonally adjusted $355.66 billion last month following a revised 2.9 percent plunge in October. Excluding motor vehicles and parts, sales were down 1.6 percent in November after a revised 2.4 percent October fall.
Excluding gasoline, retail sales had fallen 1.6 percent in October.
Sales have fallen since July, the longest stretch since the Commerce Department began collecting the data in 1992. The decline was driven by a weakening economy and plummeting energy prices, which was also reflected in a report on producer prices.
Wholesale prices fell for a fourth month in a row in November, with the Producer Price Index dropping 2.2 percent after a record 2.8 percent drop in October.
Wholesale energy prices fell 11.2 percent in November, a fourth straight monthly decline, with gasoline prices plunging by a record 25.7 percent.
""It just speaks to how weak the economy is, and it is definitely impacting costs,"" said Robert MacIntosh, chief economist for Eaton Vance Corp. in Boston. ""I think this all fits with the fact we are in a pretty deep recession.""
The November sales decline was slightly less than the drops of 1.9 percent for total sales and 1.8 percent for sales excluding motor vehicles that had been forecast by Wall Street economists surveyed by Reuters. Sales of furniture, electronics and clothing were up last month after decreasing in October.
The period from Thanksgiving through Christmas is typically the most robust one for U.S. retail sales, but analysts expect consumers to pull back on the totals they spend this year.
""We're in a recession, sentiment is very bad and it is not surprising to see sales continuing to fall,"" said Kim Rupert, managing director for global fixed income analysis at Action Economics LLC in San Francisco.
The Reuters/University of Michigan Surveys of Consumers said its index of confidence for December rose to 59.1 from November's 55.3, aided by the fall in one-year inflation expectations to their lowest in five years.
The index was at its highest since September and contrary to economists' expectations of a fall to 54.8, according to the median of forecasts in a Reuters poll. Their projections ranged from 50.0 to 58.0.