Sales at US retailers suffered a record decline in October, government data on Friday showed, as shoppers reined in spending with home prices falling, although plunging gasoline prices also reduced outlays by consumers.
Sales slumped 2.8 per cent last month to a seasonally adjusted $363.7 billion, the largest decline since the series began in 1992, the US Commerce Department said.
This compared with a revised 1.3 per cent fall in September, previously reported as a
1.2 per cent decrease.
"What you are seeing now is the turmoil in the credit and funding markets playing out into the consumer sector," said Kevin Flanagan, fixed income strategist, global wealth management at Morgan Stanley in Purchase, New York.
US stock index futures were lower after the report, bonds were steady and the U.S. dollar dipped briefly against the yen before pushing back to levels before the data was released.
Economists polled by Reuters forecast a 2 per cent fall in October retail sales as an escalating financial crisis forced consumers into a defensive crouch. Retail sales last month were down 4.1 per cent from a year ago.
Sales excluding autos also notched a record 2.2 per cent drop in October versus a forecast for a 1.2 per cent decline.
Lower gas prices as the cost of crude oil retreated sharply from a July peak around $147 a barrel helped depress sales at gasoline stations by a record 12.7 per cent in October.
This left a closely watched core measure of retail sales excluding autos and gasoline down by 0.5 per cent in October.
"Take our cars and gas, it's a drop of half a percent. It's not good, but it's not horrific. This could have been worse; it's encouraging that it wasn't," said David Resler, chief economist at Nomura Securities in New York.
Individual car makers have reported a collapse in sales since mid-September after auto-loan terms tightened sharply in the aftermath of investment bank Lehman Brothers failed.
The Commerce Department said motor vehicle and parts sales slide 5.5 per cent in October after a 4.8 per cent September fall. October's performance for this category was the weakest since August 2005, when car sales were off 10.3 per cent.
Furniture and home furnishing sales dropped 2.5 per cent in October, reflecting depressed conditions in the US housing sector, whose collapse last year sparked the credit crunch that has taken a heavy toll on the hitherto robust consumer sector.