Reuters

(Reuters)

October Retail Sales Rise Less Than Expected

Politics Reuters

U.S. retail sales rose less than expected in October amid a surprise decline in automobile purchases, suggesting a slowdown in consumer spending that could temper expectations of a strong pickup in fourth-quarter economic growth.

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The Commerce Department said on Friday retail sales edged up 0.1 percent last month after being unchanged in September.

Economists polled by Reuters had forecast retail sales increasing 0.3 percent in October after a previously reported 0.1 percent increase in September.

Sales at auto dealerships fell 0.5 percent last month after rising 1.4 percent in September. The decline is surprising given that motor vehicle manufacturers reported strong sales for October.

Retail sales excluding automobiles, gasoline, building materials and food services rose 0.2 percent after an upwardly revised 0.1 percent gain in September. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Core retail sales previously were reported to have dipped 0.1 percent in September. Economists had forecast core retail sales rising 0.4 percent last month.

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The lackluster report suggests that savings from cheaper gasoline are being used to pay rents, which have increased substantially over the past year.

Still, the weak spending tone is unlikely to significantly shift expectations that the Federal Reserve will raise interest rates next month in the wake of October's robust employment report. The U.S. central bank has kept its benchmark overnight interest rate near zero since December 2008.

Economic growth slowed to a 1.5 percent annual pace in the third quarter as businesses worked through an inventory glut and energy companies continued to cut back spending in response to lower oil prices.

Retail sales also were held back by a 0.9 percent drop in the value of sales at service stations, which reflected lower gasoline prices. Service station receipts fell 4.0 percent in September.

Clothing store sales were flat last month. Receipts at building materials and garden equipment stores rose 0.9 percent, while sales at furniture stores increased 0.4 percent.

Receipts at sporting goods and hobby stores gained 0.4 percent and sales at restaurants and bars rose 0.5 percent.

Sales at electronics and appliance stores fell 0.4 percent.

Sales at online stores increased 1.4 percent.

((Reporting by Lucia Mutikani; Editing by Paul Simao))

 

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