Automakers Drive Higher Retail Sales Figures

Posted in Uncategorized by wolferadio11 on November 16, 2009

Toyota Motor Corporation (TM), Honda Motor Co., Ltd. (HMC), Ford Motor Company (F) and other automakers moved higher on Monday after the Commerce Department’s Retail Sales report showed more Americans buying cars and trucks.

The Commerce Department’s Retail Sales report showed a 1.4% increase in October versus a 0.9% market expectation. A large slice of the gain was due to a 7.4% surge in sales by motor vehicle and parts dealers, after plunging 14.3% in September when the Cash for Clunkers program expired. Excluding these auto sales, retail sales fell short of expectations at 0.2%.

Meanwhile, the auto industry also received a boost when General Motors announced that it would begin repaying its debt to the U.S. ahead of schedule. The struggling automaker is expected to lose money during its first post-bankruptcy quarter, but said that it anticipates repaying $1 billion to the U.S. Treasury in December and $192 million to other parties.

Outside of the auto industry, furniture stores were among the hardest hit sectors outlined in the Retail Sales report, falling some 0.8%. Electronics and appliances also saw sales drop by around 0.6%. Meanwhile, sales were flat at gasoline services stations and posted a modest 0.2% gain at grocery stores. The strongest performers included big retail chains that posted a 0.8% rise.

Consumer spending, which accounts for about 70% of total economic activity, is being closely watched by the market as a sign of a long-lasting economic recovery. Even with better-than-expected retail sales in October, many economists remain concerned about the road ahead for consumers with high unemployment, low income growth and tight credit.

The concern is that the market, which has been posted by higher spending and a lower dollar, may begin to wane if the pace of recovery cannot keep up with expectations. Meanwhile, the government’s stimulus packages are waning at a time when unemployment is reaching a 26-year high of 10.2%. As a result, economists fear the possibility of a so-called “double-dip” recession.  Source

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