By  on September 15, 2005

WASHINGTON — Retail sales softened across the board in August as department stores and specialty chains reported flat sales and overall retail commerce fell sharply, the Commerce Department said Wednesday.

The tepid retail picture in August did not reflect the impact of Hurricane Katrina, which caused billions of dollars in damages and destroyed hundreds of businesses on the Gulf Coast. The Commerce Department said it could not quantify the impact of the hurricane on August retail sales, but it noted that the states of Louisiana, Alabama and Mississippi represent just 1.21 percent of total national sales.

"Moreover, the effect of the hurricane on the national retail sales estimates of August would be much less since the hurricane only impacted the last few days of August," according to a Commerce Department statement.

The pre-hurricane retail picture in August was lackluster. At apparel and accessories stores, sales were flat on a seasonally adjusted basis in August and stood at $16.65 billion, but were 6.6 percent ahead of last year. Sales at general merchandise stores rose 0.3 percent to $44.5 billion and were up 6.7 percent compared with last year, while sales at department stores, a subcategory of general merchandise stores, fell 0.3 percent to $17.7 billion and were down 0.7 percent.

Overall retail sales declined by 2.1 percent in August, reflecting a drop in auto purchases. Excluding the volatile auto and food sectors, sales gained 1 percent, primarily because of soaring gasoline prices.

"I think the retail environment was getting more difficult even before Katrina," said Carl Steidtmann, chief economist at Deloitte Research. "You had the head winds of higher oil prices, and that certainly hurt."

Steidtmann said the segments "most affected" by higher gas prices are clothing and general merchandise.

"Anything that is discretionary by nature is directly impacted by the budgetary crunch of higher gas prices," he said. "Over the course of the last year, gas as a share of consumer spending has gone from 3.5 percent to a little over 5 percent and that has to come out of something."

Steidtmann said the rebuilding effort on the Gulf Coast would help stimulate the economy.

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