Retail sales plunged 5% in October, the biggest decline on record, while wholesale prices rose 0.3% and industrial production remained flat, government agencies said today.
Fluctuations in the auto industry skewed all three of the economic indicators.
In retail sales, the Commerce Department said the decline followed a record monthly increase of 5.3% in September and was the largest drop since the department began tracking retail sales in this form in 1967.
Auto sales soared a record 22.3% in September, only to plunge a record 18.8% in October after the removal of special cut-rate financing incentives offered to clear out inventory. The incentives spurred huge consumer demand but resulted in a big drop in sales once they were ended.
Excluding autos, sales showed much less of a swing in the last two months, rising a slight 0.2% in October after a 0.1% increase in September.
Sales at department stores and other general merchandise stores climbed 0.8% in October after falling 1.6% in September. The improvement was credited to a pickup in sales of apparel as stores heavily promoted leftover fall merchandise that had not sold in September because of warm weather.
Even with the increase in department store sales, analysts have expressed concern that consumer spending will be lackluster in coming months as Americans, already burdened with high levels of debt, cut back on purchases.
The 0.3% increase in wholesale prices in October came about as lower gasoline prices were offset by sharp price rises for food and new cars, the Labor Department said.
Third Rise in Row
The increase in the department's Producer Price Index was the third in a row, following increases of 0.3% in August and 0.4% in September.
So far this year, wholesale prices have fallen overall at an annual rate of 3.2%, largely due to the sharp tumble of petroleum prices earlier in the year.
Economists predict only slight inflation for the rest of this year but say prices will rise more moderately in 1987 as oil prices stabilize and imported goods continue to become more expensive, reflecting declines in the value of the U.S. dollar against other major currencies.
Wholesale gasoline prices fell 7.4% in October, after a 9.5% gain in September.
Food costs advanced 0.9% after a 0.2% dip in September.
The average price of a new automobile increased 4.7% on a seasonally adjusted basis in October, marking the end of cut-rate financing packages offered by auto makers. New truck costs were up 3.1%.
Production at U.S. factories, mines and utilities remained unchanged in October as sharp reductions in output at auto plants held back growth in other areas, the Federal Reserve Board said.