The numbers: Sales at U.S. retailers rebounded in October after a recent lull, but the pace of spending appears to have slowed after a big burst earlier in the year that was widely viewed as unsustainable.
Retail sales increased 0.3% last month, the government said Friday, matching the forecast of economists polled by MarketWatch.
Most of the sales gains were reaped by auto dealers, gas stations and internet stores such as Amazon
also did well, buoyed by its online grocery arm.
Most other retailers posted soft results just before the start of the critical holiday shopping season. If autos and gasoline are excluded, sales rose a scant 0.1%.
What’s more, the pace of sales over the past year slowed to 3.1% in October from 4.1%, marking a five-month low.
What happened: Sales at gas stations jumped 1.1%, largely reflecting an increase in prices at the pump.
Internet retailers also reported a nearly 1% increase in sales while receipts at auto dealers and grocers both climbed 0.5%.
Yet sales fell at restaurants, home centers and retailers that sell clothing, electronics, appliances, home furnishings, books and sporting goods.
Sales were basically flat at department stores and pharmacies.
Big picture: Surveys of consumers suggest the 2019 holiday shopping season could be a strong one, but spending has been lackluster the past few months. Sales fell in September for the first time in seven months and they weren’t all that great in October.
Still, Americans seem to be in a good position to spend against the backdrop of the strongest labor market in decades. Incomes are rising, savings are high and debt is relatively low.
Strong sales at WalMart, the nation’s largest retailer, also suggest consumers haven’t gone into a shell.
Steady consumer spending is essential to keep the economy out of recession, especially with businesses on the sidelines as the trade war with China plays out. Households account for 70% of U.S. economic activity.
What they are saying? “Retail sales were ‘meh’ in October.” That’s how Neil Dutta, head of economics at Renaissance Macroresearch, described the report.
“What we are seeing now is that growth in consumer spending is settling into a more sustainable pace after the frenzied, but unsustainable, pace seen in the second quarter,” contended chief economist Richard Moody of Regions Financial.
Market reaction: The Dow Jones Industrial Average
and S&P 500
rose in Friday trades and hit fresh record highs. The 10-year Treasury yield
slipped to 1.83%.