Blog

Drop in automobile sales could have stunted retail growth

February 17, 2012

Reports from the Department of Commerce revealed that retail sales did not increase as much as economists predicted because of decreasing automobile sales.

Reports from the Department of Commerce revealed that retail sales did not increase as much as economists predicted because of decreasing automobile sales. Sales excluding the automobile industry grew by 0.7 percent, which was closer to the 1 percent predication from economists surveyed by Marketwatch. Including auto sales in the calculation brings the rate down to just 0.4 percent growth.

“Consumers are being very picky at this point,” Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC, told Business Week. “We saw aggressive retailer discounting and sharp price cuts in the new year. It bodes poorly for retailers’ margins.”

Auto makers offered some of the deepest discounts at the beginning of 2012. Following some of the highest peaks in sales since 2009, auto makers dropped prices in January. Revenue dropped down to an estimated $71 billion from over $72.5 billion in December.

Businesses that saw steady growth in January include bars, restaurants, general stores and department stores. Target and Limited Brands Inc. exceeding economists projections by luring consumers back with promotional sales, according to Business Week. Retailers can streamline transactions by offering updated mobile credit card processing equipment that can quickly and efficiently process payments. 

Back To Blog