WEAK CHRISTMAS buying and a sharp drop in auto sales helped push retail sales down slightly in December, but sales for all of 1984 were still 10.4 percent above the 1983 level, the Commerce Department reported Tuesday.
The department`s report came as the Conference Board, a business research organization based in New York, released figures showing that consumer confidence in December dropped to its lowest level in more than a year.
However, Commerce Secretary Malcolm Baldrige predicted that retail sales this year would grow, though at a slower pace than last year, when sales totaled $1.3 trillion.
THE GOVERNMENT reported that December sales totaled $110.8 billion, a 0.1 percent decline, the first since a 0.8 percent drop in August.
In November, sales rose a relatively strong 2 percent, a gain that analysts then attributed mainly to early Christmas shopping. That, however, was before a relatively warm December.
”The weather had an impact, since last year it was so bitterly cold and seasonal items sold well. But this year it was warm in the Midwest and on the Eastern Seaboard, so those items didn`t do as well,” said John Landschulz, an analyst for Mesirow & Co. in Chicago.
While reporting that sales were up from last Christmas, the nation`s retailers described the gains as disappointing. In addition, many retailers were forced into heavy price-cutting before Christmas to get rid of a backlog of merchandise.
THE OVERALL December decline was attributed mainly to a steep drop in auto sales, which fell 2.3 percent after a 2.1 percent increase in November. The drop in auto sales was the first in four months, but sales for the year were still up 6.1 percent from 1983.
”That figure is only a bit surprising, since auto sales had some momentum. But you have to factor in that the durable-goods cycle has been going for a while, and it just got tired,” Landschulz said. Sales of durable goods, items expected to last at least three years, were down 0.9 percent, mainly because of the drop in auto sales, the government reported.
If auto sales had been excluded, retail sales would have risen 0.5 percent in December, the government reported.
SALES OF nondurable goods such as clothing were up 0.4 percent in December. This included a 2.3 percent increase at department stores, a 1 percent gain at apparel stores and a 1 percent gain at restaurants. Grocery stores suffered a 1.1 percent drop in sales, and sales at service stations were also down 1.1 percent, primarily because of a drop in gasoline prices.
Sales in the furniture group increased 2.8 percent, led by strong holiday sales of televisions and other electronic equipment, which are included in the furniture category.
Sales of building materials were up 2.1 percent in December after an even stronger 6.6 percent November gain. The back-to-back increases followed four months of declines.
All of the calculations reflect adjustments designed to account for predictable, seasonal influences on sales figures.
IN ITS SURVEY of 5,000 households, the Conference Board`s consumer confidence index dropped to 85.6 in December from 96.8 in November. It was the lowest point for the index since the 85.2 reading of October, 1983.
The board`s buying-plans index slipped to 95.9 in December from 102.7 in November. A reading of 100 would mean that consumers responded to the survey as optimistically as they did in the base year of 1969.
Business conditions were described as ”good” by 25.5 percent of the respondents, down from 29.6 percent in November. The drop was a surprise to the board.
”With the relatively good economic news in recent weeks, the sag in consumer spirits was unexpected,” said Fabian Linden, executive director of the board`s consumer research center. ”December`s drop in confidence indicates there may be some recent weakening in the economy that has not yet registered in the standard statistical reports. While a single month`s reading is too scant to be conclusive, the depth of the decline is disconcerting.”
THOSE expecting business conditions to improve six months from now declined to 20 percent in December from 26.1 percent in November. In addition, 17.3 percent of the respondents expect fewer jobs to be available in six months, up from 13.7 percent in November.
The auto industry may suffer further slight setbacks, based on the survey. About 8 percent of the respondents said they plan to buy a car in the next six months, down from 8.5 percent in November.
Despite decreasing mortgage rates, the figures on those planning to buy homes also dropped slightly. In November, 3.1 percent of the respondents said they planned to buy a home in the next six months, but only 2.9 percent reported such plans in December.
