Lower auto sales push retail sales down – USA TODAY
Retail sales fell 0.3% in September as consumers backed off on purchases of cars, home goods and clothing, the Commerce Department said Wednesday. But attention now shifts to the all-important holiday shopping season.
Excluding autos, sales fell 0.2% in September. After surging 10.4% in August, auto sales fell 0.8% in September. Clothing and accessories stores saw sales drop 1.2%.
Electronics purchases helped offset the decline with sales up 3.4%, possibly benefiting from Apple’s release of the new iPhone. Apple says it sold more than 10 million iPhone 6 and 6 Plus models, a record for a new model, in the three days after the phones went on sale.
Overall sales are up 4.3% in the past 12 months. That’s the more significant number, says Kurt Jetta, CEO of consumer and retail analytics firm TABS Group. Because Labor Day fell on Sept. 1 this year, most back-to-school spending happened in August.
The length of the holiday shopping season, however, will be “consistent” with last year, says Chris Christopher, director of U.S. consumer economics for IHS Global Insight. He predicts a 4.2% rise in retail spending as stores shy away from the rampant discounting that marked last year shopping season.
In a boon to mass merchandisers like Walmart and Target, Christopher predicts low- to mid-range retailers will do better this year. Last year, they had to contend with fallout from the government shutdown.
“We think general merchandise (and) discount stores are going to do well this Christmastime and not discount as much as last year,” he says.
Walmart executives, who laid out a plan to grow the giant retail chain Wednesday in a presentation to investors and analysts, said net sales are expected to grow 2% to 4% this fiscal year, down from their earlier prediction last year of 3% to 5%. Next fiscal year, they predict 2% to 4% growth. The company cited a “tougher sales environment.”
Walmart isn’t making predictions on holiday sales yet. But executives say they are making moves that will put them more in tune with their customers holding — the line on store growth while beefing up the online sales operation. “E-commerce is becoming more pervasive and we have an opportunity to grow,” said CEO Doug McMillon on a media call.
“September wouldn’t have gotten any benefit from that,” Jetta says. The jump from a year ago points to “pretty healthy increases in consumer spending.”
He also says the bump in electronics sales is on track with research his company did in August that found Millennials are shifting spending away from consumables and toward tech.
The September retail sales report came against turmoil in financial markets..
Diane Swonk, chief economist of Mesirow Financial, said in a blog post Wednesday that the news “couldn’t come at a worse time for financial markets.”
Stocks were in free fall Wednesday after the Dow Jones industrial average fell 370 points at market open. The Dow ended down 173 points.
“Fear of everything, from weakness in Europe to terrorism and ISIS to the spread of Ebola, has added to volatility and exacerbated the flight to safety,” Swonk said. “I would feel a lot better if lower prices at the pump and lower interest rates were spurring more spending, particularly on housing, which remains a weak spot for the economy.”
Employers added 248,000 jobs in September, yet average hourly pay fell a penny to $24.53. Wage growth has barely kept pace with inflation, limiting how much Americans can spend.
Contributing: Associated Press