Car scheme's end hits US sales

Wednesday 14 October 2009 14.26
US sales figures - Fall smaller than expected
US sales figures - Fall smaller than expected

US retail sales fell 1.5% in September after moving into positive territory the previous month as the country emerges from a long recession. The figures were affected by a drop in vehicle sales after the end of the US government's popular scrappage scheme in August.

The sales slump followed a revised 2.2% rise in August but was less than the 2.1% drop expected by most analysts.

Approaching a holiday shopping season critical to economic recovery, US retailers are bracing for a difficult period with credit still tight and consumer caution lingering.

Many early projections suggests retail spending in the final two months of 2009, a season that accounts for a large proportion of sales and profits, will be flat or lower.

A breakdown of the September figures showed that motor vehicle and parts sales tumbled 10.4%, the largest monthly fall since August 2005, after rising 7.8% in August.

Excluding motor vehicles and parts, retail sales rose by a bigger than expected 0.5% in September after increasing 1% in August. That cemented the view that consumer spending recovered and the economy started growing in the third quarter after the worst US recession since the 1930s. Economists had expected a 0.2% excluding cars. Consumer spending normally accounts for about 70% of US economic activity.