With the critical Christmas shopping season getting underway, the government reported today that retail sales last month were only 0.6 percent better than a year ago.
Even that small gain was attributable entirely to a jump in auto sales. Without the 3.9 percent surge in car sales resulting from model year-end discounts, retail spending for the month would have been less than last year.
The figures released by the Commerce Department suggest November retail sales will be no better, analysts said. Only a buying rush as Christmas nears can lift holiday sales and provide the boost in consumer spending that economists say will be needed to lead the nation out of the recession.
"These figures do not support the notion that that we are seeing a consumer-led recovery yet," said Edward Yardeni, chief economist at Prudential-Bache Securities. "The retail sales data confirms that consumers are postponing purchases until they see declines in interest rates."
November's weak retail sales "reflect deterioration in economic fundamentals such as employment and income," said Jack W. Lavery, chief economist at Merrill Lynch Pierce Fenner & Smith. "Retail sales are not likely to improve dramatically in November given the unemployment results for October."
Lavery, however, predicted consumers will loosen their purse strings and produce the late December gains that many retailers are hoping for. "I think the consumer will fire one decent salvo at Christmas time because of the dramatic improvement in financial net worth resulting from gains in the stock and bond markets," Lavery said.
As reported by the Commerce Department, retail sales for the month rose to a seasonally adjusted total of $89.55 billion, following a September gain of 0.6 percent to $89.04 billion. The September sales figure was revised down from the 1.0 percent gain reported earlier by the government. In August, retail sales fell by 1.1 percent.
October auto sales rose 3.9 percent to $16.1 billion, after a September gain of 4.3 percent. Without the auto gain, retail sales last month would have dropped by 0.1 percent to $73.4 billion.
Release of the figures comes as the nation's retailers make their final plans for the Christmas season, during which most stores earn the bulk of their profits for the year.
In the eyes of major retail merchants, the October figures had to be particularly discouraging because sales of nondurable goods fell by 0.4 percent during the month, after rising by 0.2 percent in September.
Just this week, a number of key executives in the retail world said they see little indication of a particularly buoyant holiday shopping season despite increasing consumer wealth stemming from the boom in the financial markets and the recent turnover of All Savers certificates.
Tandy Corp. President John Roach, whose company operates the Radio Shack chain, said October figures "do not indicate any strong trend." At a conference here, Roach said he expected "a last-minute Christmas" of late buying "with the last five days holding the answer to retail results."
Even at Toys R Us Inc., the thriving retail toy chain, Chairman Charles Lazarus said today he expects "a good but not great Christmas." Many large retailers are pinning hopes for the Christmas season on sales of home computers, electronic games, appliances and other durable goods that homeowners are buying to improve their homes.
In addition, many retailers are hoping that predictions of a particularly cold winter in the Northeast will boost sales of warm clothing. But both retailers and economists say there is little hope for dramatic retail gains over the coming two months.