A plunge in demand for cars dragged down otherwise robust retail sales in January, US government figures showed today, but war and terrorism fears clouded the outlook.
Retail sales dropped 0.9 per cent in January, but if automobiles are excluded they surged a larger-than-expected 1.3 per cent, the sharpest gain since September 2000, the Commerce Department said.
US Federal Reserve chairman Mr Alan Greenspan had argued in testimony in the past two days that businesses were being extremely cautious in the face of the war uncertainties.
The US lifted its national terrorism threat level from "elevated" to "high" last Friday. The government heightened nerves by advising people to pack emergency kits, including duct tape to seal rooms.
War and terrorism concerns weighed down investors on Wall Street, where the Dow Jones industrials average of 30 top stocks fell 56.64 points, or 0.73 per cent, to 7,701.53 within the first hour.
In January, sales at automobile dealerships plummeted 7.5 per cent, the steepest decline since they crumbled in November 2001, in the wake of the September 11th attacks on the US.
Other drags on sales were furniture, down 1.4 per cent, electronics and appliances, down 1.4 per cent, Internet and catalog shopping, down 0.4 per cent, and department store goods, down 0.1 per cent.
But sales of building materials shot up 2.9 per cent, the largest increase since April 2001, gasoline sales soared 2.7 per cent as prices at the pump leapt, restaurant and bar sales surged 1.1 per cent, grocery sales climbed 3.0 per cent and clothing sales rose 0.3 per cent.
AFP