New Retail Sales Figures Seen as Positive Sign

Retail sales fell in September, but analysts are still hailing it as a hopeful sign for the economy.

That's because nonautomotive sales actually rose for the second straight month and more than analysts expected. Automotive sales fell more than 10 percent following the expiration of the Cash for Clunkers program in August, which dragged down sales figures overall.

Figures released today by the Commerce Department show that total retail sales declined 1.5 percent in September, less than the 2.1 percent private analysts had predicted. Nonautomotive sales increased by half a percent, more than the 0.2 percent increase that had been expected, and following a 0.7 percent increase in August.

The two consecutive months of nonretail gains, although slight, are considered by many analysts to be evidence that the economy reversed its decline and began to grow again slowly in the third quarter of the year.

"Retail sales in the third quarter saw its strongest gain in almost two years, due to the successful 'Cash for Clunkers' program," U.S. Commerce Secretary Gary Locke said, in a statement accompanying the new figures. "The healthy increase in sales excluding motor vehicles and gasoline over the past two months indicates that consumers are gaining confidence and spending is beginning to rebound. But much work remains. More stimulus spending in the coming months should further promote an upturn and put more Americans back to work."

Sales figures for August were revised to show a 2.2 percent increase, adjusted down from 2.7 percent originally reported. Overall September retail sales were reported to be down 5.7 percent from their September 2008 level.

Also today, the Commerce Department reported that manufacturing sales and shipments rose by 1.0 percent in August compared to the previous month, while inventories declined by 1.5 percent. The figures suggest manufacturers are continuing to pare down excess stock and are moving toward the point where they will begin to boost production to replenish supplies, which would be a major step toward an economic rebound.