Taxable sales fall by 4.5 percent

Could recession-weary Nevadans finally be ready to spend again?

New numbers from the state Department of Taxation show that taxable sales improved noticeably in February in several consumer-oriented categories, including car sales, clothing purchases and meals out.

But the gains weren't enough to rescue the state's overall taxable sales. Nevada's merchants rang up $2.8 billion in sales in February, down 4.5 percent from $2.9 billion in the same month a year earlier. Clark County businesses posted $2.1 billion in taxable sales, down 4.9 percent from $2.2 billion in February 2009.

Those are the smallest sales drops in nearly two years. Dropoffs have eased since December, partly because analysts are comparing 2010's sales to 2009's steep declines. For example, sales fell nearly 20 percent year over year in February 2009, and the most recent decline comes on top of that huge falloff. February's taxable-sales tally for Clark County alone is $700 million below the $2.8 billion in sales the county experienced in February 2008, noted Brian Gordon, a principal in local research and consulting firm Applied Analysis.

"There are some signals starting to emerge that suggest we're approaching the bottom, but we're not out of the woods," Gordon said.

For signs of a possible floor under the downturn, consider February's improvements in several consumer categories that saw major declines through 2009.

Sales among dealers of cars and car parts, for example, spent much of 2009 dropping by 25 percent or more year over year. In February, transactions among car dealers rose 8.2 percent.

Wayne Frediani, executive director of the Nevada Franchised Auto Dealers Association, credited the sector's growth to incentives from Toyota and Lexus. The sister manufacturers began offering zero-percent financing and leasing incentives about two months ago in the wake of massive recalls involving mechanical malfunctions in their cars.

Credit markets have also loosened, so consumers have an easier time getting car loans, Frediani added. Plus, stock markets have posted big gains in recent months, and there's plenty of pent-up demand from consumers, who've largely put off buying big-ticket items since the recession began in December 2007.

"I think we're past the worst. I think we're going to see better days ahead," Frediani said. "I think it's going to be relatively modest growth, but car dealers are pretty resilient, and the industry is pretty resilient."

Despite the uptick in purchases, car sales remain well below their highs, Frediani added. Car sales peaked at $420 million in fiscal 2007, and cratered to $252 million in fiscal 2009. In calendar 2009, car sales slipped 21 percent nationwide, and 36 percent in Nevada.

"It's going to be a while" before car sales in Nevada ever return to their apex, Frediani said. Restoring those glory days will require drastic drops in joblessness and an improved housing market, he said.

In other consumer-reliant sectors, bars and restaurants saw a 7.4 percent jump in sales, while clothing retailers experienced a 9.8 percent increase. Sales among department stores and other general retailers inched up 2.7 percent.

The results could signal that stable housing values and a slower rate of job loss have assured anxious consumers at least a little.

"It is a positive sign to see some of the consumer-driven sales categories show signs of actual improvement over the prior year," Gordon said. "These numbers are compared to a rebased (lower) level of spending, but the data do suggest consumer sentiment may be starting to pick up. The general sense is that people are starting to settle into what may be the new norm."

But the construction sector, which is one of the state's biggest employers, showed no signs of stabilizing.

The sales report showed a 57.9 percent tumble in building-related transactions, as excess inventory in housing, office parks and industrial centers curbed demand for additional construction.

Also declining were sales inside furniture stores (off 6.5 percent) and grocery stores (down 2.1 percent).

Gross revenue collections from sales and use taxes totaled $220.8 million in February, down 0.2 percent when compared with February 2009. Revenue collections in the first eight months of fiscal 2010, which began July 1, are down 8.6 percent when compared with the first eight months of fiscal 2009.

In the first eight months of fiscal 2010, the general-fund portion of sales and use taxes is 1.9 percent, or $9.2 million, above projections set by the Economic Forum, a nonpartisan group that forecasts revenue for state budgets.

Sales and use taxes help finance schools and prisons, among other public services.

Gov. Jim Gibbons took note of the smaller declines in taxable sales, as well as increases in several key sales segments.

"To gain traction and build on these modest signs of economic improvement, despite continuing high unemployment, we are focusing on efforts to remove barriers to business development and to promote commerce through interagency collaboration," Gibbons said in a statement.

Contact reporter Jennifer Robison at or 702-380-4512.