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Economy in Brief

Lower Gasoline Prices Dropped U.S. Retail Sales
by Tom Moeller October 13, 2006

Last month US retail sales fell an unexpected 0.4% after a little revised 0.1% August decline. Consensus expectations had been for a 0.2% September rise.

The decline, however, was due to a 9.3% drop (-6.3% y/y) in sales at gasoline stations. That reflected a 13.4% m/m fall in gasoline prices to an average $2.56 per gallon. Gas prices in October are lower still at an average $2.29.

Less gasoline, September nonauto retail sales rose 0.8% (7.3% y/y), double the prior month's increase.

Sales by motor vehicle & parts dealers were unchanged (5.6% y/y) as unit vehicle sales rose 3.5% m/m to 16.63M.

Excluding autos, retail sales fell 0.5% after an unrevised 0.2% increase during August.

Sales of discretionary items were quite firm last month. Apparel store sales spiked 3.0% (10.7% y/y) higher while sales at general merchandise stores also were firm and posted a 1.1% (6.3% y/y) increase. Sales at furniture, home furnishings & appliance stores lagged with just a 0.2% (4.5% y/y) gain after a slight decline during August. Sales of nonstore retailers (internet & catalogue) rose 0.3% (12.5% y/y) after a little revised 2.1% July spike.

Building material sales also were strong and increased 1.1% (12.9% y/y) while food service (restaurant) and drinking service sales rose 1.0% (8.3% y/y).

The latest Beige Book covering regional economic conditions prepared by the Federal Reserve Bank of Richmond can be found here.

  September August Y/Y 2005 2004 2003
Retail Sales & Food Services -0.4% -0.1% 5.5% 7.2% 6.2% 4.2%
  Excluding Autos -0.5% 0.2% 5.5% 8.2% 7.2% 4.7%
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