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Economy in Brief

U.S. Retail Sales Weak: A Broad-Based Decline
by Tom Moeller September 12, 2008

The Commerce Department reported that August retail sales fell 0.3%. The decline followed a revised 0.5% July drop that was deeper than reported initially. The June sales figures also were revised weaker. On a three-month basis overall retail sales fell 1.7% (AR) and that was down from last year's 4.1% increase. The August decline compared to a Consensus expectation for a 0.3% increase.

Lower gasoline prices played a roll in the decline in last month's sales figure. Sales at gasoline service stations fell 2.5% (+22.5% y/y). That followed a 0.2% uptick in July as well as gains of 4.0% and 3.3% during the prior two months.

To an extent, gasoline sales' weakness was offset by a 1.9% increase in sales of motor vehicles & parts. That recovered nearly half of the July shortfall but sales remained down 13.5% y/y. Sales fell at an 18.8% annual rate during the last three months.

Retail sales excluding autos fell 0.7% in August, a decline deeper than Consensus expectations of a 0.2% shortfall.

Sales excluding gasoline & autos also were down. The 0.4% (+3.2% y/y) drop reversed all of the July increase. It also weakened growth on a three-month basis to a 1.0% annual rate. That represents sharp deceleration from the six-to-ten percent growth in place since April.

Sales offurniture, home furnishings & appliances fell for the third straight month, down by 0.7% (-2.9% y/y). Sales of electronics & appliances fell 1.3% (+1.2% y/y). Sales of furniture & home furnishings stabilized a bit and they were unchanged m/m (-6.8% y/y). Apparel store sales also were weak and the 0.3% (+1.2% y/y) decline reversed the July increase. General merchandise store sales also fell. The 0.2% dip reversed a modest July gain and it reduced the three-month growth rate to 1.8% from 10%+ just a few months ago.

Sales of building materials and garden equipment added to the weakness as they fell 2.2% (-2.7% y/y).

Purchases made from home also were quite weak. Sales of nonstore retailers (internet & catalogue) dropped 2.3% (+6.1% y/y) and that followed a rise of just 0.8% during July. Three-month growth in these sales fell to -3.9% (AR).

Yesterday's comments by Fed Vice ChairmanDonald L. Kohn at the Brookings Panel on Economic Activity, Washington, D.C. can be found here.

  August July Y/Y 2007 2006 2005
Retail Sales & Food Services (%) -0.3 -0.5 1.6 4.0 5.8 6.4
  Excluding Autos -0.7 0.3 5.5 4.4 6.8 7.5
    Less Gasoline -0.4 0.4 3.2 4.1 6.2 6.4
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