A stunning, non-Katrina-related drop in retail sales is reported for August.
U.S. retail sales dropped by a larger-than-expected 2.1 percent in August, the sharpest drop in almost four years, after car purchases collapsed from July’s near-record level, government data showed on Wednesday.
The Commerce Department said it could not quantify the impact of Hurricane Katrina but said it would have been small because the storm-affected region accounted for little more than 1 percent of total national sales.
“Moreover, the effect of the hurricane on the national retail sales estimates in August would be much less, since the hurricane only impacted the last few days of August,” the department said in a statement, noting that it had to estimate some of the results for August because some firms had problems in reporting.
Wall Street analysts forecast retail sales to decline 1.2 percent following July’s 1.8 percent gain. But sales were held back by a record 12.0 percent drop in motor vehicle and parts sales, despite continued heavy discounting by dealers.
Retail sales outside of the auto sector rose 1.0 percent, compared with expectations for a 0.5 percent advance, after a revised 0.5 percent gain in July. This was initially reported as up 0.3 percent.
But much of the rise was a pure price effect after gasoline spiked higher, a gain that continued into September after the hurricane drove gasoline prices well above $3 a gallon in many places.