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Friday, 12 October, 2001, 22:17 GMT 23:17 UK
US retail sales plunge
Wal Mart storefront
Discounters are still managing to attract shoppers
Retail sales in the US plunged in September, confirming just how badly consumer confidence has been affected by the 11 September attacks in New York.

Sales dropped by 2.4% in September, far more than expected and the worst month-on-month fall since February 1992 when retail data was first compiled in this way.

Worst month-on-month performers
Non-store retailers:
Food/drink services:
Motor vehicles/parts:
Building/garden equipment:
Source: US Commerce Department
In August, despite an already slowing economy, retail sales rose by 0.4%.

The attacks have dealt a blow to department and clothes store chains, as shoppers diverted their business to cheaper alternatives.

In another blow to corporate America, the government also released data showing that producer prices had risen slightly on the month, confounding hopes of an easing in business costs.

Within minutes of the announcements, the dollar, which has performed strongly in recent days, fell sharply against the euro and yen.

The falls came despite a 2.3 point rise to 83.4 of the closely watched University of Michigan US consumer sentiment index for October.

The report included the period covering the attacks on the US and bucked three successive months of declines.

No more luxury

The poorest goods sales in the retail sector have been in the luxury or non-necessity brackets.

Car sales plunged by 4.6%, while restaurant and clothing sales dropped by more than 5%.

The weakest performers of all were non-store retailers - a category that includes e-commerce - whose sales plunged by 8% on the month.

Only sales of food and at grocery stores and petrol stations managed a rise - and the 3% rise in petrol sales was almost entirely the result of hikes in the price of oil products.

Although analysts had predicted a better sales performance - with most tipping a near-1% September fall - the weak figure was indicated by a series of weak results from big retailers on Thursday.

Wal-Mart boost

One company which is still managing to bring in the shoppers is Wal Mart, the largest retailer in the world. It saw sales grow by 6% last month.

"Clearly consumers are looking for value. Consequently people who may not have shopped often with us in the past... are shopping with us now," a company spokesman told the BBC's World Business Report.

"They are pursuing value like many Americans, as the economy has remained soft for a while. These are the types of consumers that we are seeing and working hard to retain."

The BBC's Andrew Walker
"The result is that the US economy is very likely now in recession"
Wal Mart spokesman Tom Williams
"Clearly consumers are looking for value"
See also:

10 Oct 01 | Business
Blame it on Bin Laden
11 Oct 01 | Business
Gap sales slump
09 Oct 01 | Business
Survey says Americans fearful
14 Aug 01 | Business
US retail figures beat forecasts
25 Sep 01 | Business
Business gurus warn of US recession
27 Sep 01 | Business
US joblessness at nine year high
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