Taxable sales fall 7.4 percent
Nevada's car dealers, clothing retailers and restaurants noticed big sales gains for the second straight month in March, but the improvements couldn't rescue the state from its two-year slide in overall taxable sales.
The state Department of Taxation reported Thursday that taxable sales of goods sold through Nevada merchants came to $3.3 billion in March, down 7.4 percent from $3.6 billion in March 2009. Taxable transactions in Clark County slumped to $2.5 billion, down 9.4 percent from $2.8 billion a year earlier.
Taxable sales statewide peaked at $4.7 billion in December 2006 and $3.5 billion in Clark County in December 2007.
Leading the way in March's losses were construction, which stumbled 57.6 percent, and wholesale durable goods, which fell 56.9 percent.
But consumers spent more on big-ticket goods and small discretionary purchases alike, the numbers showed.
Sales among dealers of cars and car parts rose 10.7 percent statewide year over year in March, on top of an 8.2 percent annual gain in February. The improvements follow more than a year of double-digit percentage declines in the category.
Retailers of clothes and accessories saw a 15.6 percent spike in taxable sales, in addition to a 9.8 percent bump in February. Restaurants and bars posted a 5.1 percent jump in sales, after a 7.4 percent boost in February. Sales inside accommodations, or hotels and motels, surged 26.6 percent year over year in March, following a 28.1 percent increase in year-over-year sales in February.
"Some of the major areas that reported year-over-year growth suggest that residents are looking at some big-ticket items and potentially returning to a new normalized level of spending," said Brian Gordon, a principal in local research firm Applied Analysis. "And it's important not to forget the visitor component of consumer spending, which contributes to taxable retail sales, particularly in food services and accommodation. The mix of purchases resulted in spending levels that remain off the prior year but are not as dire as we've seen."
Other areas seeing sales increases include furniture retailers (11.6 percent) and general-merchandise stores (2.6 percent).
At Buffalo Exchange, a vintage and resale clothing store on Maryland Parkway, sales are up 5.7 percent over a year ago, said store manager Christina Usatenko. The store is on course for a record-breaking sales year.
But more noticeable is the store's different vibe, Usatenko said.
The demographic has changed, morphing from a destination mostly for college kids looking for funky clothing into a store that draws diverse groups ranging from moms to club-goers. What's more, the nature of transactions is evolving. Customers bringing in clothes in 2009 would ask for cash in exchange for their threads, Usatenko said. Today, they're looking to swap clothes and even spend a little.
"I have not seen people just selling their clothes because they need the money really badly," Usatenko said. "It was hard last year, because people had all sorts of sad stories. Now, people take the trade and spend the money in here instead of taking the cash home."
Customers also seem happier.
"A year ago, when I would buy at the counter from sellers, people would be upset or angry. We've just seen an overall mood change, which always means a more pleasant environment in the store. People are calming down a little bit," Usatenko said.
Despite improvements on the consumer side, expect construction to drag down overall taxable sales in the near term, because it's such a substantial part of the state's economy and its numbers have fallen so steeply, Gordon said.
To see the potential offsets resulting from the big dropoffs, look at the specialty-trade contracting subcategory of construction. The segment's March sales were down $75.5 million from a year earlier in Clark County. Clothing's dollar increase was far smaller, growing $31.6 million .
The story is similar in wholesale durable goods: The category's March sales were down $266 million from a year earlier, while furniture's gain was $6.1 million, and restaurants' increase was $28.9 million . Those types of comparisons will make it difficult for consumer spending alone to power the state out of its sales-revenue recession.
Don't expect construction spending to revive anytime soon. Nevada's glut of supply in commercial and residential buildings should forestall the need for new development "for years, and not months," Gordon said.
With construction essentially at a standstill in recent months, though, numbers from the building sector should show smaller declines by the time year-over-year comparisons hit in late 2010. That could ease the industry's downward pressure on sales numbers by the end of the year, Gordon said.
Gov. Jim Gibbons pointed to positive sales signs in a Wednesday statement.
Gibbons noted that March yielded the fourth straight month of single-digit percentage declines in taxable sales, following 14 consecutive months of double-digit drops. Plus, he said, taxable sales grew in nine of Nevada's 17 counties.
But "other indicators continue to cast a shadow on Nevada's economic recovery," Gibbons said, pointing to an unemployment rate of 13.7 percent and a sustained construction slump.
Gibbons said his administration is looking to spur recovery by taking measures that include authorizing all stimulus funds for road construction. That could create or save up to 5,600 jobs in the state, he said.
Taxable sales were off 13.3 percent in the first nine months of fiscal 2010 when compared with the same period in fiscal 2009. The fiscal year begins July 1.
Gross-revenue collections from sales and use taxes totaled $261.9 million in March, a 2.1 percent drop compared with March 2009. Collections are down 7.9 percent year over year in the first nine months of fiscal 2010. The state general fund's $66.5 million share of sales and use taxes was down 8.6 percent year over year in March.
But the numbers are beating forecasts of the Economic Forum, a nonpartisan group that projects revenue for state-budget purposes. The general fund's allotment of sales and use taxes is $10.3 million, or 1.9 percent, above expectations for the first nine months of fiscal 2010.
Revenue from taxable sales helps fund schools, prisons and other public services.
Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.
