Retail sales declined in October, but less than expected as consumer demand holds up better than economists had anticipated.
Retail sales declined by 0.1% month over month in October, according to the U.S. Census Bureau, which was narrower than the expected 0.3% drop predicted by economists tracked by
FactSet.
The figure for September was adjusted higher to a 0.9% gain for retail sales from 0.7%.
At first glance, a drop in retail sales might be concerning for stores as the holiday shopping season begins. However, falling gasoline prices in October were a main driver for the decline. Sales at gasoline stations declined 0.3% from September. When stripping away motor vehicles and parts and gas stations, total retail sales actually increased 0.1% month over month, which is better than the 0.1% drop economists expected.
“The consumer is alive and well,” wrote Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “Given expectations that retail sales would contract month-over-month, instead we saw slight gains in the data.”
Sales in the control group, which excludes cars, gasoline, building materials, and food services, gained 0.2% in October, compared with the 0.7% increase in September. Capital Economics Chief North America Economist Paul Ashworth wrote Wednesday that this is “still an impressive result.”
Health and personal-care stores achieved the largest gain in retail sales, rising 1.1%, while furniture retailers had the largest decline with a 2% drop.
The data Wednesday was released a day after the Bureau of Labor Statistics reported slower growth in the consumer price index for October. Cooling inflation and resilience among consumers bodes well for retailers as the holiday shopping season gets started. Black Friday arrives next week.
“Next weekend, about eight in 10 holiday shoppers are likely to buy something on Black Friday, Small Business Saturday or Cyber Monday, but recent trends suggest they will continue to be very price-conscious,” Ted Rossman, senior industry analyst at Bankrate, wrote Wednesday.
Meanwhile, the Federal Reserve is looking for a cooling economy as it decides whether to implement further interest-rate increases as it fights inflation. Quincy Krosby, chief global strategist for LPL Financial, wrote Wednesday that the central bank, which is keeping a close eye on all incoming economic data, will now need to “carefully assimilate the implications of a still resilient consumer.”
Write to Angela Palumbo at [email protected]
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