Washington, DC, Oct. 11 — Consumers cut back on their spending in September, driving down sales at the nation''s retailers by 1.2%, the largest drop in ten months, according to the Commerce Department. It was a troubling sign for the struggling economic recovery, and raised new questions about consumers'' willingness to spend in the months ahead, including the holiday shopping season.
The pullback in September reflected consumers'' skittishness about a possible war with Iraq, the rollercoaster stock market and a sluggish jobs market, according to economists.
The 1.2% decline in retail sales in September was the the largest drop since November and followed a solid 0.6% rise in August.
“I think consumers were standoffish or tightfisted because of the uncertainties plaguing the U.S. economy as well as the financial markets,” said Richard Yamarone, an economist with Argus Research.
While Yamarone was hopeful consumers would spend at a strong enough pace to prevent the economy from tipping back into recession, he said he didn''t think the holiday shopping season would be very merry for many retailers.
Separately, wholesale prices edged up by just 0.1% in September, after being flat in August. The good news on inflation gives Federal Reserve policy makers leeway to keep short term interest rates low or possibly lower them should economic conditions worsen.
Much of the weakness in September''s retail sales came from a 4.8% drop in automobile sales. Economists predicted that booming auto sales, stoked by 0% financing offers and other incentives, would not be able to maintain such brisk activity and would eventually slow. In August, sales at automobile dealerships rose by 1.5%.
Excluding automobile sales, overall retail sales inched up 0.1% in September.
Cautious shoppers trimmed spending in other areas, too.
Sales at furniture and home furnishing stores fell by 0.5% in September, a turnaround from a 0.8% advance the month before. At clothing stores, sales fell by 0.9% in September, after a 0.3% rise. Electronics and appliances stores saw sales dip by 0.3%, erasing a 0.3% gain in August.
People ate out less, sending sales at bars and restaurants down by 0.4% in September, following a 0.2% increase. At food stores, sales fell by 0.4%, on top of a 0.2% decline.
General merchandise stores, including department stores, saw sales dip by 0.1%, following a 0.5% increase. Sales at gasoline stations were flat, after falling by 0.7% in August.
There were some bright spots in the report. Sales of building and garden supplies rose 1.8%, on top of a 0.7% gain in August. For health and beauty products, sales went up 1.5%, up from a 0.6% increase. And, sales at sporting goods, books and music stores grew by 1.5% for the second month in a row.
