Retail sales up 0.5%, if you don’t count autos

WASHINGTON (AP) — Retail sales declined in September by the largest amount this year as car sales plummeted after the end of the government’s popular Cash for Clunkers program. But outside of autos, sales were better than expected.

The Commerce Department said Wednesday that retail sales dropped 1.5 percent last month. That’s smaller than the 2.1 percent fall economists had expected, but still the biggest setback since sales dropped 3.2 percent in December.

Car sales plunged 10.4 percent, but excluding autos, retail sales rose 0.5 percent. That’s better than the 0.2 percent increase analysts expected.

Consumer demand, which accounts for 70 percent of total economic activity, is being watched closely by economists who worry that any recovery from the recession could stall because of the strong headwinds that households still face.

“The increase in sales excluding autos is still fairly modest by normal standards,” Paul Dales, an economist at Capital Economics, wrote in a research note. “Moreover, with households’ finances likely to remain constrained by falling employment, declining real incomes and tight credit, we doubt that consumption will continue to grow at such rates.”

Analysts had expected increases at general merchandise stores afer reports last week from the nationwide retailers that sales grew in September at stores open at least a year compared with activity in September 2008. It marked the first year-over-year rise in sales after a year of declines, according to data from the International Council of Shopping Centers and Goldman Sachs.

Shoppers are hungry for markdowns, looking for sales signs at stores, while cashing in on a tax credit for first-time homebuyers and low mortgage rates and home prices. A late Labor Day and delayed school openings also helped retailers last month because consumers purchased some items in September that they would normally have bought in August.

Kohl’s Corp. department store chain, Limited Brands Inc., which runs Victoria’s Secret and Bath & Body Works, and accessories chain The Buckle Inc. all said their September sales rose at stores open more than a year.

J.C. Penney Co., Cincinnati-based Macy’s Inc. and Target Corp. reported their same-store sales fell but not as much as they had expected.

Analysts believe the overall economy, as measured by the gross domestic product, is growing in the second half of this year at an annual rate of 3 percent or more. But the concern is that growth rate could slip sharply next year if consumer spending falters.