Retail Sales Off on Falling Gas Prices

Washington, DC, October 13, 2006– The sharp drop in gasoline prices drove the value of U.S. retail sales down by 0.4% in September, the Commerce Department reported Friday.

Excluding gasoline, retail sales rose 0.6%. Sales excluding both autos and gas rose 0.8%, the biggest rise since January.

Sales at gasoline stations plunged by a record 9.3% in September, as the average price of a gallon fell by about 30 cents. Prices have continued to fall in October.

Auto sales were flat in September. Excluding motor vehicles, retail sales fell 0.5%, the biggest drop in three years.

Elsewhere in the retail sector, sales were modestly higher in September.

Sales were particularly perky at the malls in September. Clothing store sales jumped 3%, the biggest gain in a year. Sales at general merchandise stores rose 1.1%, while department store sales rose 1%.

Sales of durable goods were tepid. Furniture store and electronics store sales rose 0.2%, and sales at hardware stores rose 0.6%.

Ultimately, lower prices at the pump should free up cash for other purposes, but the effect was limited in September.

Sales at restaurants and bars rose 1% in September after rising 1.2% in August, a sign that discretionary spending remains robust.

Economists were expecting retail sales to rise about 0.1%, with sales excluding autos expected to fall 0.1.

Retail sales account for about half of consumer spending, which in turn makes up about two-thirds of final sales.

Most economists expect consumer spending to grow about 3% in the third quarter, a bit below the long-term trend.

Retail sales rose a revised 0.1% in August, with sales excluding autos up 0.2%. Sales rose 1.4% in July. Retail sales increased 1% in the third quarter compared with the second quarter.

Retail sales are up 5.5% in the past year. The figures are not adjusted for price changes.