WASHINGTON (AP) â¿¿ U.S. retail sales likely declined in October because Superstorm Sandy closed businesses in the Northeast, fewer Americans bought cars and gas prices fell sharply.
Economists forecast that retail spending dipped 0.1 percent last month from September, according to a survey by FactSet. That would be the first drop after three straight increases. The Commerce Department will release its report at 8:30 a.m. EST Wednesday.
In September, retail sales jumped 1.1 percent. Spending rose in nearly all categories. Auto sales increased at a healthy pace and the release of Apple's newest iPhone pushed up sales at electronics stores.
The buying spree helped lift economic growth in the July-September quarter and reflected growing consumer confidence. Consumer spending drives nearly 70 percent of economic activity.The October decline in retail sales is likely to be temporary and not the start of a trend, economists said. A key reason is that Superstorm Sandy hit the East Coast on Oct. 29 and disrupted businesses from North Carolina to Maine. The storm also lowered auto sales last month by about 30,000, according to TrueCar.com. Overall, car sales dipped to an annual pace of 14.3 million in October, down from a 14.9 million pace in September. Retail sales are likely to rebound this month, analysts said, because Americans are spending more on repairs and making up for lost shopping trips. Another reason sales likely declined last month is gas prices fell steeply, lowering total sales figures at gas stations. The average price for a gallon of gas was $3.44 Tuesday, according to AAA. That's down 35 cents from a month earlier. Excluding autos, gasoline and building materials, October retail sales are forecast to rise 0.3 percent, according to economists at JPMorgan Chase. That suggests consumers are still willing to spend more on most goods. Sales at many large retail chains were strong last month. Sales at 21 large retailers, from the Costco warehouse club to Macy's department store, rose 5 percent compared to the same month a year ago, according to the International Council of Shopping Centers.