September 15, 2005--Retail sales plummeted by 2.1% last month, dragged down by slumping auto sales, the Commerce Department reported Wednesday.
The decline in August, the biggest slide since the months following Sept. 11, 2001, spared most small businesses, which continued to report solid growth, a National Federation of Independent Business study showed.
According to U.S Census Bureau data, advance estimates of retail and food services sales for August totaled $350.1 billion, down 2.1% from July, but up 7.9% from August 2004. Total sales from June through August were also up 9.4% from the same period last year, the figures showed. The numbers are adjusted for seasonal variation and trading day differences, but not for price changes.
The decline came despite gains in nearly ever sector outside motor vehicle and parts, including building supplies, health care products, clothing and accessories, sporting goods, furniture, electronics and appliances, and food and beverages. Excluding the auto sector, which plunged by 12% from July, total sales were up by a full 1%, according to the figures.
Battling record-high fuel prices, automakers and car dealerships sold just 16.8 million cars and light trucks in August, after boosting sales by 6.3% to 20.9 million in the previous month. The boom in July is credited to employee discount deals offered by General Motors, Ford and Daimler Chrysler, sales campaigns that weren't carried over last month. Auto sales were also dampened by this summer's rising gas and oil prices, which spiked in the aftermath of Hurricane Katrina and have since begun to drop.
Still, the tallies are a further indication that economic growth was slowing down before Katrina struck.
According to the Commerce Department, the storm's impact on August retail sales figures was minimal, given that it struck late in the month and areas the worst hit account for a small percent of total sales.
William Dunkelberg, an NFIB economist, said any interruption to a tight energy market and a prolonged shutdown of the New Orleans port could have a big, though temporary, affect on the economy. "That could dampen growth, no doubt," Dunkelberg said last week.
Still, NFIB data released Tuesday showed small businesses across every sector reporting solid sales last month, with owners remaining optimistic for the months ahead. "They're telling us business conditions are good," said Dunkelberg.
Retail sales accounts for half of all consumer spending, which represents a full two-thirds of the economy.