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Friday, Sep. 4, 1998
Retailers report weak August sales
Late Labor Day, signs of slowing economy blamed for decline; U.S. worker productivity also down
By RACHEL BECK
Associated PressNEW YORK -- Retail sales at many of the nation's biggest stores fell below expectations in August, raising concerns about the outlook for the rest of the year, especially during the Christmas season.
It was the first month in 1998 of weak sales for many retailers, who had been enjoying one of their better years thanks to a healthy economy and surging stock market.
While much of the August decline stores reported Thursday was blamed on a Labor Day holiday that this year falls a week later than usual, analysts also warned of slowing consumer spending.
``We can't draw too many conclusions from the month of August,'' said Kurt Barnard, a retail consultant and president of Barnard's Retail Trend Report in Upper Montclair, N.J.
``But going forward, we are very likely to see shopping momentum slowing down from what we've been seeing, especially if there are problems with the stock market or the economy.''
August's figures are the first display of weakness in a very strong year. In previous months, low inflation and unemployment levels, a raging stock market and a strong U.S. economy encouraged consumers to shop.
But there have been disturbing signs that the economy's pace is slowing, hurt by turmoil in financial markets abroad. Also, a steep slide in the stock market, which peaked in July, has raised fears that the good times are winding down.
The Labor Department reported Thursday that growth in American workers' productivity -- the key to rising living standards -- slowed this spring.
Productivity of nonfarm, nonsupervisory workers -- measured as output per hour of work -- rose at 0.1 percent annual rate in the second quarter. That's better than estimates a month ago that productivity declined 0.2 percent in the April-June quarter, but it's still the worst showing since the third quarter of 1996, when productivity was unchanged.
The Dow Jones industrial average is down more than 17 percent from its record close of 9,337.97 on July 17. The blue-chip index, after sliding more than 200 points in late trading, finished the day down 100.15 at 7,682.22.
``The problems with the stock market haven't trickled down yet to the consumer, but that doesn't mean they won't,'' said Jeffrey Feiner, managing director at Lehman Brothers Inc.
In fact, several recent surveys on consumer confidence say Americans are beginning to feel less secure about the U.S. economic outlook. A decline in consumer confidence can be a precursor to a slowdown in consumer spending.
But unemployment remains near a 28-year low.
The Labor Department, which today releases employment figures for August, said Thursday that first-time applications for jobless benefits rose only slightly last week. At the same time, the four-week moving average of claims, which economists consider even more telling, fell to 302,250 -- its lowest level in a year.
In addition, Freddie Mac, the mortgage company, said Thursday that the average interest rate on 30-year fixed-rate mortgages dropped to 6.82 percent this week -- a new five-year low -- from 6.92 the week before.
While the economy is weighing on consumers' minds, analysts said the greatest cause for weakness in August came from the late Labor Day, with the bulk of the back-to-school season coming in September.
Those hardest hit by the late Labor Day were those retailers who depend on clothes and accessories for back to school, like Federated Department Stores Inc., Sears, Roebuck & Co., and May Department Stores Co.
Also hurting August sales was foul weather in much of the country, especially along the East Coast and in Texas.
Faring best last month were discount retailers, who continue to entice shoppers with their low prices and wide selection. Wal-Mart Stores Inc. had another stellar month, while sales were also strong at Dayton Hudson's Target discount stores.
The Merrill Lynch retail index, the investment firm's barometer of sales performance at department stores and discount chains, was up 2.3 percent in August. It rose 4.6 percent in July and was up 5.2 percent in August 1997.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web