Autos drag on US retail sales, price pressure subdued
By Lucia Mutikani, Reuters
November 16, 2012, 3:10 pm TWN
WASHINGTON, -- U.S. retail sales fell in October for the first time in three months as Superstorm Sandy slammed the brakes on automobile purchases, suggesting spending lost momentum early in the fourth quarter.
Other data on Wednesday showed wholesale prices falling last month for the first time since May, giving the Federal Reserve latitude to maintain its ultra easy monetary policy stance.
Retail sales dipped 0.3 percent after a 1.3-percent increase in September, the Commerce Department said. Economists had expected sales to fall 0.2 percent.
"Sandy was a drag, but I expect we will see a gain in sales in November," said Gus Faucher, a senior economist at PNC Financial Services Group in Pittsburgh.
Part of the drop in sales was payback after two straight months of solid gains. It could also be a sign of hesitation among consumers facing the prospect of higher taxes next year.
Even excluding autos, retail sales were flat last month.
Automatic tax hikes and government spending cuts will siphon about US$600 billion from the economy next year if Congress fails to act to avert them. This "fiscal cliff" has already eroded business confidence.
"It's imperative that policymakers address the looming fiscal cliff now to give consumers some certainty heading into the holiday shopping season," said Matthew Shay, president of the National Retail Federation.
Carmakers blamed Sandy, the monster storm that lashed the densely populated East Coast and caused up to US$50 billion in damage, for the abrupt pullback in sales last month.
Automakers said traffic at East Coast dealerships slowed as residents began to brace for the storm, which hit at the end of the month. Sales tend to build up late in the month, which likely amplified the impact.
Ford Motor Corp. estimated the industry lost sales of 20,000 to 25,000 vehicles, while Toyota put the loss at 30,000.
The Commerce Department said it had received indications from companies that the storm had both positive and negative effects on retail sales overall, but it said it was unable to quantify them.
Motor vehicle sales declined 1.5 percent, the largest fall since August last year, after increasing 1.7 percent in September. Excluding autos, retail sales were unchanged last month after advancing 1.2 percent in September.
The storm also likely dented sales at clothing stores, but probably boosted receipts at food and beverage stores.
Economists expect the storm could shave as much as half a percentage point from economic growth in the fourth quarter. However, any lost activity should be made up early next year.