THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, September 15, 1995 TAG: 9509150531
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium: 71 lines
Americans went on a car-buying spree last month, helping push retail sales to the third increase in four months.
But analysts said Thursday's report - combined with a sharp increase in weekly unemployment claims - does not point to economic strength.
The Commerce Department said sales rose 0.6 percent in August, rebounding from a 0.4 percent decline the previous month.
But the spending was concentrated largely in auto purchasing, as dealers offered discounts to trim inventories. Car sales jumped 2.4 percent in August after falling 1.5 percent in July.
Excluding autos, retail sales were unchanged in August after a 0.3 percent gain in July. Analysts said home computers and software were the only other area in which sales were solid.
``It's certainly not a sign of strength,'' said economist Charles Renfro of Alphametrics, a forecasting service in Bala Cynwyd, Pa. ``The economy is moving ahead with deliberation. It's nothing really to write home about.''
What's more, the Labor Department said the number of American workers filing first-time claims for jobless benefits shot up by a surprising 21,000 last week to the highest level in nearly two months.
``The two reports should reduce the fear that growth is about to accelerate excessively,'' said Bruce Steinberg of Merrill Lynch & Co. ``Modest gains in consumer spending will remain a brake on the current U.S. expansion.''
On Wall Street, stocks were up slightly at midday, with the Dow Jones industrial average gaining nearly 6 points. The yield on the Treasury's 30-year bond fell to 6.46 percent - moving in the opposite direction of its price - amid hopes economic weakness will bring further interest rate cuts by the Federal Reserve.
Federal Reserve policy-makers meet Sept. 26 to decide whether the economy's sluggishness warrants another interest rate cut. Analysts said there is room for one but predicted the lack of a definite trend may prompt the panel to sit tight, content the economy is on course for a soft landing, combining moderate growth and little inflation.
The Fed, after raising rates seven times over a one-year stretch, reversed course in July and trimmed a key rate for the first time in nearly three years.
The Commerce Department said sales fell more sharply in July than previously estimated - down 0.4 percent instead of 0.1 percent.
The August rebound pushed sales to a seasonally adjusted $197.3 billion, up from $196 billion the month before.
Durable goods - including appliances, autos and other items expected to last more than three years - were up 1.7 percent last month after falling 0.8 percent in July.
Sales of home furnishings - a category that includes computers - rose 1.8 percent in August after slipping 0.4 percent. But building materials fell 0.8 percent after advancing 0.3 percent.
Durable goods were up 7.4 percent over a year earlier, while all sales were 5 percent higher than August 1994.
Sales of nondurable goods such as food and fuel fell 0.1 percent for the second straight month.
Department stores reported a 0.4 percent drop in August, wiping out an identical gain in July. The hot summer helped send clothing sales to their second straight 1.5 percent decline.
There was no change in grocery store sales after a 0.6 percent increase in July. Gasoline sales fell 1.2 percent after a 2.1 percent drop. Sales at restaurants and bars slipped 0.5 percent after a 0.7 percent advance.
KEYWORDS: ECONOMY by CNB