Retail Sales Drop 1.2 Percent In September

October 15, 2008 6:33 p.m. EST

Washington, D.C. (AHN) - The Commerce Department announced Wednesday that retail sales in September fell 1.2 percent. The drop was much larger than the 0.7 percent fall economists had predicted.

September's retail sales decline was the worst month-over month drop since a 1.4 percent decline in August 2005. Year-over year sales were down 1 percent for September.

Auto sales were the main culprit, down 3.8 percent in September as total vehicle sales fell below 1 million units. Excluding auto sales, retail sales fell 0.6 percent. That drop was nearly double what economists expected. Department store sales were especially weak, down 1.5 percent.

Much to consumers' chagrin, gasoline station sales were up 17.8 percent from September 2007.

The decline in September marks the third consecutive month retail sales have dropped, that is a first in the 16 years government has tracked monthly data.

The Commerce Department also released business inventories for August, rising 0.3 percent. The increase was smaller than the 0.5 percent jump economists expected and much less than the 1.1 percent surge in July. Rising business inventories are generally viewed as an indication of falling demand, thus seeing a build in supply.