Retail sales sputter in October

Total sales increased 0.2%, in line with estimates but ex-auto sales miss forecasts; September results revised higher.

Retail sales grew at a sluggish pace in October as many cash-strapped Americans continue to struggle with higher gas prices, less equity in the home and tighter credit availability.

The Commerce Department said total sales rose 0.2 percent last month from a revised gain of 0.7 percent in September. September sales originally were reported to have increased 0.6 percent.

Economists surveyed by Briefing.com had forecast a rise of 0.2 percent for the month.

Stripping out volatile auto sales, retail sales rose a weaker 0.2 percent versus a 0.4 percent increase in September.

Economists, on average, had forecast an ex-auto gain of 0.3 percent for the month.

Furniture and home furnishing stores were the hardest hit, posting a sales decline of 0.9 percent in the month. Department stores suffered a 0.5 percent sales decline, sales at sporting goods, book and music stores fell 0.4 percent while e-commerce sales declined 1 percent.

Elsewhere, clothing sellers logged a mediocre 0.1 percent gain. Electronic chains saw an anemic 0.1 rise in sales at their stores last month.

Many clothing chains last week blamed warmer-than-expected weather for weak October same-store sales, which measures sales at stores open at least a year.

Auto sales rose just 0.2 percent while higher gasoline prices boosted gasoline station sales by 0.8 percent.

As expected, last month's sales softness is spreading concerns about this year's holiday shopping season, which officially kicks off next week after the Thanksgiving holiday.

Fourth-quarter retail sales can account for as much as 50 percent of merchants' annual profits and sales.

This is the worst performance in five years and we expect a further deterioration as consumers cut back in the face of soaring gas prices, falling stock prices and the continued disaster in housing, Ian Shepherdson, chief U.S. economist with High Frequency Economics, wrote in a note Thursday.

Already the past three months have been grim in general merchandise, furniture, electronics and clothing . The holiday season will be terrible, he said.

The National Retail Federation expects this year's holiday sales in November and December to grow 4 percent, or weaker than last year's 4.6 percent increase.

Source - CNN Money