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Retail Sales Climb by a Modest 0.2% : Rise Interpreted as Showing Economy Survived Stock Crash

December 11, 1987|Reuters

WASHINGTON — Retail sales rose by a modest 0.2% in November, the Commerce Department said today, providing the clearest indication yet that the economy suffered little harm as a result of the stock market crash.

Moreover, inflation remained subdued with prices at the wholesale level showing no change last month after dropping 0.2% in October, the Labor Department said in a separate report.

Retail sales rose $210 million in November to a seasonally adjusted $125.86 billion, following declines of 0.9% in October and 1.7% in September.

Automobile, furniture and department store sales fell, but the declines were offset by gains in building materials, clothing store and restaurant sales.

Holiday Sales Disappointing

Excluding autos, retail sales were up 0.4% compared with a drop in October of 0.1%.

The modest increase, which was in line with economists' expectations, points to humdrum Christmas sales and disappointing profits for the nation's department stores.

Department store sales fell 0.6% in November after a 0.8% October rise, while sales at general merchandise stores fell 0.3% after rising 0.7% in October.

But the overall increase should go a long way toward allaying fears that consumers would drastically slash their spending because of the wealth some lost in the Wall Street crash and perhaps tip the economy into recession.

Economists still expect spending to slow down and reduce growth in the first part of 1988, but few are now forecasting an outright recession.

3.4% Rise in Year

Retail sales have risen 3.4% in the 12 months since November, 1986.

The Labor Department said its producer price index was unchanged last month because modest increases in food prices were offset by declines in energy prices, which fell for the third consecutive month.

Finished goods prices last month were 2.5% higher than a year earlier, the department said.

Led by a surge of more than 40% in fresh vegetable prices, food prices rose 0.3% in November after slipping 0.1% in October. But meat and dairy prices declined last month.

Energy Costs Fall

The cost of energy goods fell 0.8% last month as declines in natural gas prices more than offset gains in gasoline and heating oil prices. Energy prices had fallen 1% and 3.7% in the previous two months.

But energy goods prices were 13.2% above their year-ago level.

Natural gas prices fell 3.2% in November after a 2.7% decline the previous month, leaving them 8.6% below their year-earlier level.

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