WASHINGTON – U.S. retail sales were flat last month as cheap auto financing deals lost their allure, the government said on Thursday in a report showing some caution among consumers as the economy struggles through a soft spot.
The Commerce Department said retail sales, which make up about 40 percent of total consumer spending, were unchanged in October at a seasonally adjusted $301.7 billion. But the picture was brighter when autos were stripped out, with a bigger-than-expected rise of 0.7 percent.
"It still shows that consumers are holding up their end of the economy. We did see some softness in the auto component, but retail sales excluding autos were particularly healthy in October — healthier than anticipated," said Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis.
Economists in a Reuters poll had forecast, on average, that overall sales would fall by 0.2 percent. Excluding autos, sales were expected to rise by 0.3 percent.
Federal Reserve Chairman Alan Greenspan told a congressional panel on Wednesday that the recent slide in auto sales bore watching to determine if it was a pullback from earlier strength or marked a real slide in demand.
In the report, Commerce said auto sales dropped by 1.9 percent last month, after a 5 percent plunge a month earlier.
One bright spot in October was a 4 percent rise for sales of clothing and accessories, the biggest since December of last year. Gasoline sales rose 1.5 percent after inching up 0.1 percent in September.
Auto sales tumbled 14.3 percent from a year ago, when shoppers began flocking to showrooms as low- and no-interest financing deals were first introduced by automakers in the aftermath of the Sept. 11 attacks and a series of interest.