US retail sales in record plunge

US consumers are cutting back on big purchases such as cars

US retail sales fell sharply last month, recording the biggest monthly decline since 1992, as hard-up consumers avoided the shops.

The US Commerce Department said sales fell 2.8% in October. This follows a 1.3% decrease in September.

Sales have dropped in recent weeks and Circuit City, the electronics retailer, has filed for bankruptcy protection.

The decline in October was steeper for car sales, at 5.5%, as consumers deferred big purchases.

Retail woes

However, analysts pointed out that retail figures excluding cars and petrol had fallen just by 0.5%.

Furniture and home furnishings sales were down 2.5% as the housing downturn hit related sectors.

This month, several US chain stores, including Macy's and Best Buy, have issued profit warnings for the rest of 2008.

The world's largest retailer, Wal-Mart, beat forecasts by reporting an unexpected 2.4% increase in sales in October.

It said its range of discounted products attracted consumers shopping for bargains.

A separate report by the US Labor Department showed import prices dropped 4.7% in October, mainly because of a significant fall in the price of fuel.

Confidence blip

Despite the fall in retail sales, a separate survey by Reuters and University of Michigan revealed that US consumer confidence rose slightly from a record fall in October.

The survey indicates that the confidence index reached 57.9 in November, from 57.6 in October.

It is still below the lowest levels reached during the last two recessions in the United States.

Analysts said a significant fall in gas prices offset some of the worries about the general economic downturn.