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Retail sales drop points to slow recovery

Sales fall after a surge in the previous month, but the drop is smaller than forecast.

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By Ben Rooney, CNNMoney.com staff reporter

NEW YORK (CNNMoney.com) -- Retail sales fell in September after a popular program aimed at boosting auto sales ended, but the drop was smaller than economists had expected, government data showed Wednesday.

The Commerce Department said total retail sales fell 1.5% last month, down sharply from an increase of 2.7% in August, when overall sales were boosted by the government's Cash for Clunker's program.

Economists surveyed by Briefing.com had forecast a decline of 2.1% in September sales.

Sales excluding autos and auto parts rose 0.5%, compared to a 1.1% increase in August. Economists expected a gain of 0.2% in September sales, excluding auto purchases.

Consumer confidence growing. The stronger-than-expected gain in sales outside the auto industry suggests that consumers are gradually becoming more confident as the U.S. economy emerges from a deep recession.

"Today's report is broadly reflective of what we're seeing in other areas of the economy, and that is a slow and gradual recovery," said Tim Quinlan, an economist at Wells Fargo.

Looking ahead, the improved sales data means retailers could see "modest continued growth" in months ahead, Quinlan said.

Fingers crossed for fourth-quarter boost. That bodes well for the retail industry, which brings in the bulk of its profit during the fourth quarter, as record high unemployment threatens to damp holiday sales.

Furniture sales jumped 1.4% and clothing sales rose 0.5% in September.

Total retail sales jumped in August as auto sales surged on the Cash for Clunkers program, which paid buyers up to $4,500 for their used cars when they purchased more fuel-efficient models.

But auto sales plunged after the popular program ended Aug. 24. Car sales were down 10.4% in September, according to the Commerce Department.  To top of page

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