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Economy in Brief

U.S. Retail Sales Decline In September After Auto-Led August Gain; Underlying Trend Firms
by Tom Moeller October, 14, 2009

Without the healthy incentive to buy a new motor vehicle, retail sales last month gave back their August gain. Retail Sales fell 1.5% during September after a 2.2% August increase that was slightly less than reported initially. The retail sales data are available in Haver's USECON database.· The end of the "Cash-For-Clunkers" auto sales program led to a 10.4% drop in retail sales of motor vehicles last month which more than reversed the 7.8% August jump. These dollar figures accompanied the 34.6% m/m drop in unit vehicle sales reported earlier this month which followed a 25.4% August increase.

After accounting for this extreme volatility, sales during the last two months posted fairly steady increases. Without the auto sector, retail sales rose 0.5% after a 1.0% increase during August. Moreover, these gains have suffered little from the recent jump in gasoline prices. Without autos and gasoline, retail sales rose 0.4% (-1.6% y/y) after a 0.6% August increase. These were the first two consecutive monthly increase since January/February '09. The y/y change of -1.5% compares to -4.5% y/y during July.

Discretionary spending firmed last month as sales at general merchandise stores rose 0.9% (1.1% y/y) after a firm 1.2% August increase. In the soft goods area, apparel store sales increased 0.5% (-1.3% y/y) following even firmer increases during the prior two months. Finally, furniture, electronics & appliance store sales rose 0.7% (-8.2% y/y). Furniture store sales alone more-than-reversed an August drop with a 1.4% (-6.5% y/y) jump while sales of electronics & appliances were unchanged (-9.7% y/y).

Internet and catalogue purchases slipped 0.1% (-2.3% y/y) following a 0.1% August uptick. Finally, restaurant sales gained 0.2% (0.6% y/y) after a 0.6% August gain.· Building materials sales continued their slump and fell 0.2% (-13.0% y/y) after larger declines during the prior three months.

Yesterday's speech by Fed Vice chairman Donald L. Kohn on The Economic Outlook can be found here

  September August July Y/Y 2008 2007 2006
Retail Sales & Food Services (%) -1.5 2.2 -0.1 -5.7 -0.7 3.3 5.3
  Excluding Autos 0.5 1.0 -0.5 -8.5 2.5 3.9 6.3
    Less Gasoline 0.4 0.6 -0.3 -1.6 1.6 3.6 5.7
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