US Retail Sales Dip 0.1% In September Amid Sharp Drop In Auto Sales

With auto sales showing a significant decrease, the Commerce Department released a report on Tuesday showing that U.S. retail sales unexpectedly saw a modest drop in the month of September.

The report said retail sales edged down by 0.1 percent in September following a 0.2 percent increase in August. Economists had expected retail sales to come in unchanged.

The unexpected drop in retail sales in September was largely due to a 2.2 percent decrease in sales by motor vehicle and parts dealers, which followed a 0.7 percent increase in the previous month.

Excluding the steep drop in auto sales, retail sales actually rose by 0.4 percent in September compared to a 0.1 percent uptick in August. Ex-auto sales had been expected to rise by 0.3 percent.

The increase in ex-auto sales reflected a 1.0 percent increase in sales at grocery stores as well as a 0.9 percent increase in sales at restaurants and bars and a 0.7 percent increase in sales at electronic and appliance stores.

Core retail sales, which exclude sales of autos, gasoline, and building materials, increased by 0.5 percent in the month of September.

'The government shutdown means that October's sales may be weak,' said Paul Dales, Senior U.S. Economist at Capital Economics. 'But the fall in confidence is already being reversed and the weekly chain store sales surveys have not plunged.'

'In any case, a lot of the spending may just take place later in the month, or in November, as government workers receive their back-pay,' he added. 'Consumption growth in the fourth-quarter won't be a write-off.'

Despite the monthly decrease, the Commerce Department noted that September retail sales were up by 3.2 percent year-over-year.

The report also said total sales for the July through September period were up by 4.5 percent compared to the same period a year ago.

by RTT Staff Writer

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