Retail sales beat forecasts but ...

Last month's better-than-expected 0.6 percent jump in total sales was helped by auto purchases. But clothing, department stores and furniture sales remained weak.

By Parija B. Kavilanz, senior writer

NEW YORK ( -- Retail sales saw a surprisingly better-than-expected bounce, helped by a surge in auto purchases in September, although many merchants complained that unseasonably warm weather hurt demand for fall merchandise last month.

"This report is weaker than it appears," Ian Shepherdson, chief U.S. economist with High Frequency Economic, said in a report Friday. "Auto sales lifted the headline [number] and sales ex-autos were boosted by a 2 percent rise in gasoline sales."

The Commerce Department said that total sales rose 0.6 percent last month after a gain of 0.3 percent in August. A strong 1.2 percent jump in auto sales drove much of that increase.

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

Stripping out volatile auto sales, retail sales also saw a slightly better-than-expected 0.4 percent increase versus a 0.4 percent decline in August.

Economists, on average, had forecast a gain of 0.3 percent. But excluding both auto and gasoline station sales, retail sales rose just 0.2 percent.

On Thursday, some of the nation's biggest retail chains - including Wal-Mart (Charts, Fortune 500), Nordstrom, Target (Charts, Fortune 500) and Gap (Charts, Fortune 500) - reported disappointing sales at their stores open at least a year, which is a key measure of retail performance.

Wal-Mart said warmer weather and economic constraints on its consumers resulted in sluggish same-store sales growth at its stores last month.

These trends were reflected in the government's report.

Excluding a 2 percent gain in gasoline station sales and a 0.9 percent increase in purchases at electronics stores, discretionary purchases in other retail categories slumped last month.

Clothing sales fell 0.4 percent, department stores suffered a 0.7 percent decline and sales of furniture and home furnishing products also decreased 0.6 percent.

"The September report is definitely a mixed report," said Scott Hoyt, director of consumer economics at Moody's

"The weakness in clothing and department stores is consistent with the weak same-store sales numbers that we saw from Gap, J.C. Penney, Nordstrom and other chains yesterday," he said.

This report is also consistent with our view that consumer spending has moderated from earlier this year," Hoyt said.

Brian Bethune, U.S. economist with Global Insight, agreed.

"If you take out motor vehicle and gas sales, in terms of the total picture, it's consistent with the overall theme that consumers are becoming more cautious," Bethune said.

Bethune said the jump in auto purchases was induced by very big incentives from carmakers. "They reduced the average finance rate to incredible low levels in September," he said. "So you have to put the motor vehicle piece of the picture in context of the incentives provided last month."

"This also shows that in order to get consumers to shop today, retailers are resorting to incentives, gimmicks, coupons," said Bethune. "In other words, they're using every trick in the book to keep consumers engaged." Top of page