Retail sales up 0.2 percent in September

WASHINGTON (Reuters) – U.S. retail sales rose a slightly
weaker-than-forecast 0.2 percent in September after car
purchases tumbled, but sales excluding autos were helped by
higher gasoline prices, government data showed on Friday.

The Commerce Department said it was not able to pinpoint
the impact of hurricanes Katrina and Rita. But it said the
effect probably went both ways, with some stores closed by the
storms while others recorded stronger sales of supplies in the
affected areas.

Wall Street analysts forecast retail sales to rise 0.4
percent in September following an upwardly revised 1.9 percent
fall in August. August retail sales had initially been reported
as a 2.1 percent decline.

September purchases were held back by a 2.8 percent drop in
motor vehicle and parts sales, despite ongoing dealer
incentives to boost demand.

But excluding autos, retail sales rose 1.1 percent,
compared with expectations for a 0.8 percent advance, building
on the 1.0 percent increase in August.

Part of the rise was a pure price effect after the
hurricanes drove gasoline prices well above $3 a gallon in many
places, while the exodus of millions of motorists from the
affected areas pumped up sales.

The Commerce Department said September gas station sales
were up 4.0 percent. But retail sales excluding motor vehicles
and gasoline were also higher, notching a 0.6 percent advance
to match August’s gain.

Building material and garden equipment sales were up 1.0
percent with furniture demand increasing 1.2 percent. The U.S.
housing market has been rampant thanks to low borrowing costs,
buoying prices and breaking records for new home sales.

But some other sources of discretionary spending showed
weakness, with clothing sales down 0.2 percent, sporting goods
and sales from hobby, book and music stores off 0.9 percent and
department stores sales declining 0.5 percent.

Analysts fear high energy prices could sap consumer
spending, on top of any negative fallout from Katrina and Rita,
although the economic evidence so far has been mixed.

The Federal Reserve expects U.S. growth to be held back
somewhat in the second half of 2005 due to the storms, but then
pick up as reconstruction-related spending kicks in.

Wal-Mart Stores Inc, the world’s biggest retailer, said on
Saturday it still expects a 2 percent to 4 percent increase in
October sales at U.S. stores. Two of its stores remained closed
due to Hurricane Rita as of Saturday, while 11 were still
closed due to Hurricane Katrina.