Record Low Gas, Auto Sales Dragged Down U.S. October Retail Sales To 2.8%

November 14, 2008 12:57 p.m. EST

Washington, D.C. (AHN) - Retail and food services sales in October worsened with record low automobile sales and gasoline purchases, according to the Commerce Department on Friday.

Sales at retailers and food services fell for the fourth straight month to a record 2.8 percent in October from the prior month, compared to 4.1 percent from the month of October in 2007.

Wall Street economists had anticipated the October's total retail and food services sales to decline by 2.1 percent as they expect the drop to continue through the holiday season in the last two months of the year.

Deteriorating consumer spending, rising unemployment rate and reduced working hours have lowered shoppers' confidence in the economy. Consumer spending has dropped by 3.1 percent in the third quarter, while unemployment rate in October moved up by 6.5 percent.

The market analysts expect both to rise as the slowdown in the U.S. economy trails into 2009.

Excluding for the distressed auto industry, sales of other products declined to a record 2.2 percent, more than the market analysts had expected to drop by 1.2 percent.

Motor vehicle and parts dealers sales were down by 5.5 percent, the largest drop recorded since August 2005, and 23.4 percent down from October 2007.

Gasoline stations sales reported a record 12.7 percent drop on lowered prices. Excluding gas station sales, retail sales dropped by 1.5 percent, which is the largest drop since August 2005.

The report also showed that retail sales, excluding autos and gasoline, declined by 0.5 percent last month. Sales of furniture and home furnishings stores sales were down 13.5 percent from last year.

Sales at furniture stores declined by 2.8 percent in October from the previous month, sales at electronics and appliance stores dropped by 2.3 percent, and sales at hardware stores decreased by 0.4 percent.