WASHINGTON, Nov 14: US retail sales, a vital component of economic growth, showed a tepid gain of 0.2 per cent in October as American consumers moderated their spending, a government report revealed on Wednesday.
The Commerce Department said retail sales cooled from a revised 0.7 per cent gain in September, and posted the weakest reading since August when sales rose just 0.1 per cent.
Excluding vehicle sales, the government said retail sales rose 0.2 per cent in October against 0.3 per cent in September.
“The consumer continues to shop, though most of the additional money is paying for the higher costs of gasoline and food,” said Joel Naroff, the chief economist at Naroff Economic Advisors.
The snapshot on consumer spending was generally in line with what economists had predicted. Analysts had called for retail sales to rise 0.2 per cent and for sales, excluding autos, to increase 0.3 per cent.
The slowdown in sales activity compared with September suggests Americans are restricting their spending amid a prolonged housing market downturn and a related credit squeeze.
Consumers are also paying more for gasoline as crude oil prices have struck record highs in recent weeks.
Economists are keeping a close watch on retail sales, which are responsible for some two-thirds of overall economic growth, amid fears that the housing slump could dent economic momentum.
Federal Reserve chairman Ben Bernanke has warned that economic growth is likely to slow in future months.
Breaking down the monthly government survey, vehicle sales were flat during October compared with a rise of 1.9 per cent in the prior month.
US automakers have been struggling to maintain sales momentum in recent months, partly due to aggressive competition from Asian automakers.
General Motors Corp. saw its US auto sales fall 1.1 per cent in October while Chrysler LLC, which is vying to restructure its operations, reported a nine per cent drop in October US sales.
The government report also showed gasoline station sales posted a 0.8 per cent increase last month compared with a 1.8 per cent rise in September.
Sales at furniture and home furnishing stores declined 0.9 per cent in October, compared with a 1.3 per cent fall in the prior month.
Clothing sales rose 0.1 per cent, compared with 0.1 per cent previously.
Electronic and appliance store sales increased 0.1 per cent against a 0.2 per cent decline in September and restaurant and bar sales rose 0.7 per cent against a 0.6 per cent increase in the prior month. —AFP
