US retail sales hit by Hurricane Sandy

US retail sales posted their first drop since June as the effects of Hurricane Sandy were on display, while wholesale prices retreated in October for the first time in five months as energy and vehicle costs declined.

Retail and food service sales fell 0.3 per cent last month following an upwardly revised 1.3 per cent increase in September, the commerce department said. Economists had expected a fall of 0.1 per cent. The government said the storm which battered the US east coast had positive and negative effects on October's sales data, benefiting some businesses over others. More News From Financial Times
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Sandy business interruption payouts loom "The impact from Hurricane Sandy, which hit near month end, seems evident and will take time to clarify," said Steven Wieting, economist at Citi Investment Research. "Food, beverage and personal care store sales rose, while restaurant sales receipts fell, typical of a sales pattern influenced by a natural disaster." Sales at clothing stores dipped 0.1 per cent after rising 0.4 per cent the prior month as the storm likely prevented shoppers from getting to the shops. Motor vehicle sales fell 1.5 per cent, the largest fall since August last year, after increasing 1.7 per cent in September. Automakers and dealers last week estimated that as many as 250,000 vehicles would end up in the scrap yard because of the storm damage. Sales excluding automobiles were unchanged, after a 1.2 per cent rise in September. Consensus forecasts had called for a 0.2 per cent rise. October's slowdown comes after the prior two months marked the best back-to-back retail sales numbers since at least late 2010. Economists had expected building material sales would increase as those in the path of Sandy made pre-storm purchases, however sales unexpectedly fell 1.9 per cent following a 2.1 per cent gain in September. Economists said retail sales data for November might show a rise as people affected by Sandy might have to purchase new household goods, supplies and clothing. Retail sales are an important component of consumer spending and account for about two-thirds of demand in the economy. Separately, the labour department said on Wednesday its producer price index edged 0.2 per cent lower on a seasonally adjusted basis last month, after increasing 1.1 per cent in September and 1.7 per cent in August - the largest gain since June 2009. Economists surveyed by Bloomberg had expected a 0.2 per cent gain. Core wholesale prices, which exclude the volatile food and energy components, also dipped 0.2 per cent in October - the first drop since November 2010. Core prices fell below expectations of a 0.2 per cent rise, after holding steady the prior month. The PPI is one of several inflation measures monitored by the US Federal Reserve. The consumer price index, set for release on Thursday, is expected to show a 0.1 per cent increase for the month of October. The fall in the PPI was led by a 0.5 per cent decline in energy prices. Heating oil declined 3.3 per cent while gasoline fell 2.2 per cent. Meanwhile the cost of passenger cars fell 1.6 per cent, the most since July 2009, while light truck prices declined 1.5 per cent, the most since October 2010. Economists said prices are unpredictable at the start of the new model year and these numbers are not indicative of the underlying trends, which point towards an upward trend.