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TheStreet Open House

September Retail Sales Fall But Don't Blame the Government

Updated from 8:59 a.m. to include more detailed information.

NEW YORK ( TheStreet) - After being delayed by more than two weeks due to the government shutdown, the Commerce Department on Tuesday finally released September retail sales and the numbers weren't good.

U.S. food and retail sales declined 0.1% in September from August to $425.9 billion, according to the latest Commerce Department figures released on Tuesday, below economists' expectations of a 0.1% rise.

Retail sales excluding motor vehicles and parts rose 0.4% compared to the month before, in line with consensus estimates. Retail sales excluding gas, autos and building materials rose 0.5% in September, slightly ahead of expectations of a 0.4% rise, according to Thomson Reuters.

But don't blame the government shutdown just yet for the decline in sales.

Retail sales have been buoyed this year by the strong demand for cars as well as home furnishings as the home buying market rebounded. However, consumers may be over their car-buying frenzy. September sales from motor vehicle and parts dealers fell 2.2% for the month, compared to a 0.9% increase in the prior month.

Furniture and home furnishing stores rose just 0.2% in September from August.

Consumers didn't seem to be buying apparel either last month. Proving that the back-to-school season was indeed softer than expected, clothing and clothing accessories stores saw a 0.5% decline in September. Sales at department stores fell 0.9%.

" A lot of people are going to say the government shutdown reversed the trend in consumer spending, when in fact when you look back on July, August, September, you already see a slowing or at least a topping out in spending patterns," says Steve Blitz, chief economist for ITG Investment Research. "There's no question ... that the slowdown hurt -- the second half of September was a lot slower than first half but you will see it in full force when the October numbers come out" on November 20.

"What you see here is basically the consumer just churning," Blitz adds. "In a given month something is a little stronger but something else is a little weaker."

"It's not so much that the consumer is falling part here as that there has been this built up expectation that the consumer is ready to just kind of bolt forward. The truth is that they're just kind of in place," Blitz says.

Sterne Agee Chief Economist Lindsey Piegza notes the auto sales decline was the biggest drop in sales since October 2012 and agrees that the drama in Washington isn't entirely to blame.

"Amid tepid job creation and minimal income growth, consumers are struggling to keep their heads above water, Piegza writes in a research note. "Retailers are already initiating holiday discounts to lure in customers. But many more see the declining trend in spending and bracing for a weak holiday season, are lowering sales forecasts and reducing seasonal hiring."

So what were they buying? Well, food for one. Sales in the category of food services and drinking places rose 0.9% in September compared to August, the data noted. Food and beverage stores also saw a 0.9% rise, according to the data.

Sales at electronics and appliances stores also had a decent showing, up 0.7% month over month. Health and personal care sales improved 0.4% and sporting goods sales gained 0.5% in the month.

Retail sales last month increased 3.2% compared to September 2012, according to government data. The Commerce Department did not change its July to August 2013 retail sales percent change of 0.2%.

Written by Laurie Kulikowski in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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