Retailers worst fears were realised with the release of the retail sales index (RSI) for October while the construction industry continues to boom.

Compilers of the RSI - the Statistics Department - said that consumer spending rebounded slightly in October, increasing 1.3 percent compared to October last year, following a sharp decline in sales activity in September.

However, after adjusting for inflation - three percent in October - the total volume of retail sales fell by 1.7 percent.

Gross turnover in the retail sector was estimated at $41.6 million and the index currently stands at 125.8 for the month.

Clothing stores reported a 14.2 percent decline in gross receipts for October with more than 70 percent of the stores in this sector experiencing sales revenue below the previous year's level.

Several factors were attributed to this decline, primarily the contraction of visitor and domestic spending following the September 11 attacks on the US.

Compilers of the RSI said: “Additionally, retailers indicated that consumers appear to be more cautious in their spending habits in fear of a potential economic recession.”

The construction industry on the other hand, continues to boom and spending on hardware and building supplies showed the strongest increase in retail sales receipts with gross sales surging 24.8 percent above the previous year's level.

“This was due partially to the buoyant ongoing building activity in the construction industry,” said the index compilers.

In other sectors, service stations posted a 3.7 decline in gas sales while the motor vehicles sector experienced a marginal increase in sales of one percent.

When adjusted for inflation, vehicle sales were down two percent compared to last year and dealers reported mixed results due to varying changes in their current levels of stock.

Gross revenue flows in the “all other store types sector” increased by 4.2 percent. Sales of furniture and home furnishings increased strongly due to promotional sales held during the month.

Spending on pharmaceutical products, personal care supplies and boating equipment and accessories also increased. Liquor merchants reported a 9.1 percent increase in sales receipts which was caused in part by higher prices for alcohol beverages during October.

Aggregate sales for food stores increased by 5.4 percent for the month.

Residents returning from overseas vacation and business trips declared purchases of goods valued at $2.76 million which was fractionally - 0.4 percent - above the $2.75 million reported in October last year.

There were 27 shopping days in October, one more than the same month last year.

Retailers will be hoping that the Buy Bermuda campaign, launched by Chamber of Commerce President Charles Gosling at a public forum at the end of September will have a beneficial impact on their sales figures for November and December.