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A barista at Sightglass Coffee makes a coffee drink in San Francisco. (Justin Sullivan/Getty Images)
A barista at Sightglass Coffee makes a coffee drink in San Francisco. (Justin Sullivan/Getty Images)

U.S. retail sales beat expectations in October Add to ...

U.S. retail sales rose more than expected in October as strong receipts from motor vehicle and building material dealers offset the drag from service stations, suggesting the economy started the fourth quarter with some vigour.

Total retail sales increased 0.5 per cent, the Commerce Department said on Tuesday, after rising by an unrevised 1.1 per cent in September. Economists polled by Reuters had forecast retail sales climbing 0.3 per cent last month. In the 12 months to October, retail sales were up 7.2 per cent.

While October’s retail sales report showed broad gains, weak income growth remains a constraint.

Consumer spending – which accounts for more than two-thirds of U.S. economic activity – rose at its fastest pace in nearly a year in the third quarter. But households are significantly cutting back on saving to fund their spending.

Retail sales last month rose as receipts from motor vehicle dealers increased 0.4 per cent, adding to the prior month’s 4.2 per cent gain. Excluding autos, retail sales rose 0.6 per cent, the largest increase in seven months, after advancing 0.5 per cent in September.

Sales at food and beverage stores increased 1.1 per cent, while receipts at sporting goods, hobby, book and music stores gained 1.3 per cent. Sales of electronics and appliances soared 3.7 per cent, while receipts from building material retailers increased 1.5 per cent.

But clothing store sales fell 0.7 per cent last month, the largest decline since December 2010, while furniture sales declined 0.7 per cent.

Receipts at gasoline stations fell 0.4 per cent last month after rising 0.7 per cent. The decline reflects weak gasoline prices. According to the U.S. Energy Information Administration, gasoline prices fell 4.39 per cent or 16 cents to $3.506 a gallon in October. Excluding gasoline, retail sales rose 0.7 per cent.

Weak gasoline prices, combined with subsiding inflation pressures should ease the burden on stretched household budgets and support holiday shopping.

Core retail sales, which exclude autos, gasoline and building materials, rose 0.7 per cent in October after advancing 0.5 per cent the prior month.

Core sales correspond most closely with the consumer spending component of the government’s gross domestic product report.

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