Retail sales sag as superstorm Sandy slows auto purchases

Retail sales fell in October for the first time in three months as superstorm Sandy slammed the brakes on automobile purchases, suggesting a loss of momentum in spending early in the fourth quarter.

Sales dipped 0.3 percent, the Commerce Department said on Wednesday, after an upwardly revised 1.3 percent increase in September that was previously reported as a 1.1 percent rise.

Economists polled by Reuters had expected retail sales to fall 0.2 percent. The decline partly reflected the impact from superstorm Sandy, which lashed the densely populated East Coast -- holding down auto sales.

The Commerce Department said it had received indications from companies that the storm had both positive and negative effects on October's sales data.

Motor vehicle sales declined 1.5 percent, the largest fall since August last year, after increasing 1.7 percent in September. Auto manufacturers have blamed the storm for the drop in sales.

They expect auto sales to rebound in November. Automakers and dealers last week estimated that as many as a quarter million vehicles would end up in the scrap yard because of the storm.

Excluding autos, retail sales were unchanged last month after advancing 1.2 percent in September, the Commerce Department said.

The storm also likely dented sales at clothing stores, which dipped 0.1 percent after rising 0.4 percent the prior month.

Building material sales surprisingly fell 1.9 percent, defying expectations of a boost from pre-storm purchases. Building materials and garden equipment sales has increased 2.1 percent in September. (Reporting by Lucia Mutikani; Editing by Andrea Ricci)