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WRAPUP 1-U.S. retail sales drop for fifth straight month

Published 12/12/2008, 09:40 AM
Updated 12/12/2008, 09:45 AM
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* Retail sales drop 1.8 pct, down for 5th straight month

* Drop in gasoline prices behind record fall in gas sales

* Producer prices fall 2.2 percent as gasoline plunges

By Glenn Somerville and Lucia Mutikani

WASHINGTON, Dec 12 (Reuters) - Sales at U.S. retailers fell for a fifth straight month in November, the longest decline in at least 16 years, as gasoline sales tumbled by a record amount, according to government data on Friday.

The Commerce Department said total retail sales fell 1.8 percent to a seasonally adjusted $355.66 billion last month following a revised 2.9 percent plunge in October. Excluding motor vehicles and parts, sales were down 1.6 percent in November after a revised 2.4 percent October fall.

Sales have fallen since July, the longest stretch since the Commerce Department began collecting the data in 1992. The decline was driven by a weakening economy and plummeting energy prices, which was also reflected in a report on producer prices.

Wholesale prices dipped for a fourth month in a row in November, with the Producer Price Index dropping 2.2 percent after a record 2.8 drop in October.

Wholesale energy prices fell 11.2 percent in November, a fourth straight monthly decline, with gasoline prices plunging by a record 25.7 percent.

"It just speaks to how weak the economy is, and it is definitely impacting costs," said Robert Macintosh, chief economist for Eaton Vance Corp. in Boston. "I think this all fits with the fact we are in a pretty deep recession."

The November sales decline was slightly less than the drops of 1.9 percent for total sales and 1.8 percent for sales excluding motor vehicles that had been forecast by Wall Street economists surveyed by Reuters. Sales of furniture, electronics and clothing were up last month after decreasing in October.

The period from Thanksgiving through Christmas is typically the most robust one for U.S. retail sales but analysts expect consumers to pull back on the totals they spend this year.

"We're in a recession, sentiment is very bad and it is not surprising to see sales continuing to fall," said Kim Rupert, managing director for global fixed income analysis at Action Economics LLC in San Francisco.

Prices for U.S. Treasury debt securities gave up some gains just after the sales data was issued but still were higher. U.S. stock futures were sharply lower after a bid to provide aid to U.S. automakers failed in the Senate on Thursday night.

Gasoline sales plummeted a record 14.7 percent in November after falling 12.9 percent in October. Prices at the pump have fallen significantly and that is reflected in the retail sales report, which simply compiles total sales by gasoline stations.

Excluding gasoline, November retail sales were down 0.2 percent after a 1.6 percent slide in October.

Sales of electronic goods climbed 2.8 percent in November, the strongest monthly rise since the beginning of 2006. Clothing sales rose a modest 0.8 percent after a 2 percent drop in October.

Sales by dealers of new cars and parts fell 2.8 percent after declining 5.5 percent in October. New-car sales have been crumbling for months, in part because of an ongoing credit crisis that makes it harder to get loans but also because consumers have been cautious when jobs are being cut and the economic outlook is weakening. (Reporting by Glenn Somerville and Lucia Mutikani, editing by Tom Hals)

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