There was a collective sigh of relief from economists and other analysts over today’s release of U.S. retail sales figures for September. There was concern that the end of the “cash for clunkers” program in the motor vehicle sector would decimate the overall retail sales results, leading to an erosion of confidence and consumer buying intentions. Instead, the numbers were not that bad.

It’s true that month-over-month auto and parts sales were -10.4% and that this was a resounding decline after August’s +7.8% performance. However, smoothed (i.e. three-month moving average) auto and parts sales were -6.7% year over year. This was considerably better than the -24.6% figure that was recorded in December 2008 when industry sales were at their worst.

Construction-related sub-categories

There are three sub-categories that have close ties to construction, mainly on the residential side. In two of those categories – “furniture and home furnishings” and “electronics and appliances” – the year-over-year sales declines have become less negative over the past three months. In the third sub-category, building materials and supplies, the slide in year-over-year sales is flattening out.

Nominal sales gains in some essential and discretionary categories

Total smoothed retail and food services sales are now -6.6% year over year. This important yardstick of consumer spending is on a gradual mend from its low point of -9.8% four months ago in May. Some areas of the economy have even maintained a nominal level of growth in this time of recession. Food and beverage store sales are +0.4% year over year; health and personal care store sales are +3.5%; and sporting goods, hobby, book and music store sales are +2.0%.

Summary

Each new statistical release from one government agency or another is a nail-biter. Will it confirm recovery or will it cast further doubt on future economic prospects? Slowly, in fits and starts, the news is starting to emerge that improvement in the overall economic climate is, indeed, underway.