WASHINGTON — Consumers were cautious in their spending in October, which led to softness in retail sales across many categories, including at specialty stores and general merchandisers, according to economists.
Sales at department stores rose 0.3 percent to $13.9 billion last month, while sales at apparel and accessories stores were flat at $21.3 billion, according to the U.S. Commerce Department’s monthly report released Friday. General merchandise store sales, a category that includes discounters and department stores, fell 0.4 percent to $56.6. billion.
Scott Hoyt, senior director of consumer economics at Moody’s Analytics said apparel and accessories stores have been struggling for the last several months.
“This is the third consecutive month and fourth in the last five months where we’ve had at least a very small decline in sales at apparel and accessories stores,” he said, noting that the October sales number actually shows a slight decline if it isn’t rounded.
For department stores, the increase in sales marked the second consecutive rise, though that was preceded by a flat month and two months of declines.
“So the trend is still weak,” Hoyt noted.
The decline in general merchandise stores sales was the first since April, he said. “There are a couple of things going on,” Hoyt said. “One is price. The sales are being restrained by a lack of price increases.
“The other is that services seem to be winning out over goods right now, in terms of consumers spending,” Hoyt said. “You can see that even in this report where restaurant sales are doing very well.”
He said Moody’s is forecasting that consumers will continue to lead the economy through the remainder of the year, though it is only predicting modest holiday sales growth.
Jack Kleinhenz, chief economist at the National Retail Federation, said October sales were “muted.”
“Deflationary pressures, unseasonably warm weather, strong year-over-year comparisons and a shift towards spending on services are just a few reasons October’s sales report came in a little muted,” said Kleinhenz. “That said, October falls outside of our expectations for the holiday season and we are still optimistic for solid holiday sales growth.”
“The uptick that is expected to come from recent job and wage improvements has yet to register in terms of our expected economic and spending growth,” he added. “As some retailers have already reported, overall third quarter growth left a lot to be desired; however, the picture is improving and consumers should start to spend more freely throughout the holiday season.”
In the overall economy, retail sales rose 0.1 percent to $447.3 billion, which was below some expectations.
Chris G. Christopher, Jr, director of consumer economics at IHS Global Insight, said consumers were cautious in October and appeared to be waiting for discounts in November.
“We expect November to perform significantly better than October, since many shoppers were waiting for the deep and heavy price discounting and promotions that occur in early November,” he said. “Clothing stores did not perform very well in October since the warmer weather is not inducing shoppers to bundle up with the latest winter fashions.”
IHS is forecasting a 3.5 percent increase in holiday retail sales compared with a year earlier.
“This holiday retail sales season is looking rather good since consumer price inflation is modest, confidence is making a comeback, the stock market has stabilized, and pump prices are falling,” Christopher said.