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Retail Sales in U.S. Decrease for First Time in Four Months

Nov. 14 (Bloomberg) -- Retail sales in the U.S. fell in October for the first time in four months, influenced by the effects of superstorm Sandy, which hurt receipts for some and helped for others.

The 0.3 percent drop followed a 1.3 percent increase in September that was larger than previously reported, Commerce Department figures showed today in Washington. The median forecast of 83 economists surveyed by Bloomberg called for a drop of 0.2 percent. The Commerce Department said it was able to collect information from the storm-affected area, even as it was not able to quantify its impact.

Companies like General Motors Co. and Ford Motor Co. have said last month’s sales slump will probably prove temporary as the rebound from Sandy, combined with brighter job prospects, rising home prices and sturdier finances boost household confidence heading into the year-end holiday shopping season. Sustained gains in consumer spending, which accounts for about 70 percent of the economy, would help counter a slowdown in business investment.

“It’s always hard to judge the pre-buying ahead of the storm versus the lack of buying during the storm and in the aftermath,” Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio, said before today’s report. “The August and September numbers were rather strong, and the earlier months were rather weak, so the truth lies somewhere in between.”

Wholesale prices unexpectedly dropped in October, led by falling fuel and vehicle costs. The producer-price index dropped 0.2 percent last month after rising 1.1 percent in September, a report from the Labor Department also showed today.

Survey Results

Economists’ retail sales estimates in the Bloomberg survey ranged from a decline of 1.2 percent to an advance of 0.6 percent. The September reading was revised from an initially reported 1.1 percent gain.

October’s slowdown comes after the prior two months marked the best back-to-back retail sales showing since at least late 2010. Part of the jump in purchases during that period was the result of households snapping up Apple Inc.’s new iPhone 5. Support also came from car and light truck sales, which climbed in September to a 14.9 million pace, the fastest in more than four years, according to figures from Ward’s Automotive Group.

Those gains weren’t repeated in October, when Sandy, the biggest Atlantic storm in history, prevented potential shoppers from getting to stores. Today’s retail sales figures show the tempest’s effects are starting to show up in economic data.

Retailer Responses

The Commerce Department said it received responses from 2,579 retailers last month, within the 12-month range of replies it had received.

“Even though the we cannot isolate the effect, we did receive indications from the companies that the hurricane had both positive and negative effects on the retail sales data,” the Commerce Department said in a statement.

Eight of 13 major categories showed a decline last month, led by auto dealers and building material stores.

Sales decreased 1.5 percent at automobile and parts dealers after a 1.7 percent gain the prior month, today’s report showed. Industry figures showed sales fell to a 14.2 million pace in October after Sandy slammed the East Coast during the auto industry’s busiest time of the month. Carmakers said those sales should be made up by the end of the year.

Retail sales excluding autos were little changed, today’s report showed. They were projected to rise 0.2 percent, according to the Bloomberg survey median.

Demand Pickup

Several retailers also reported a pickup in October demand despite the adverse weather. Same-store sales at Macy’s Inc., the second-biggest U.S. department-store chain, rose 4.1 percent, topping the 4 percent average estimate of analysts surveyed by Retail Metrics Inc. Kohl’s Corp.’s same-store sales climbed 3.3 percent, beating estimates for a 0.8 percent gain.

The retail sales category used to calculate gross domestic product, which excludes auto dealers, building-material stores and service stations, sales declined 0.1 percent after a 0.9 percent increase in the previous month.

As the holiday shopping seasons begins, Hasbro Inc.’s retail customers are “looking forward to a good year,” David Hargreaves, chief operating officer of the Pawtucket, Rhode Island-based toymaker, said during a call with analysts on Oct. 22. “Certainly consumer demand has held up pretty well. I think they’re sort of cautiously optimistic.”

Improving confidence could help keep sales on the rise. The Thomson Reuters/University of Michigan consumer sentiment gauge advanced to a five-year high in November. Rising house prices are also shoring up wealth: The S&P/Case-Shiller index of home values in 20 cities has risen from a year earlier for the past three months, the longest positive stretch in two years.

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