Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=225902
Story Retrieval Date: 7/31/2014 4:27:16 AM CST
October saw the highest seasonally adjusted increase in sales since July.
Retail sales gain in October raises hopes for merry holiday season
Retail sales rose more than expected in October and gave retailers optimism for the holiday shopping season.
October retail sales increased 0.4 percent, more than the 0.1 percent expected by 86 economists surveyed by Bloomberg, bolstered by cheaper gasoline and stable employment figures.
September’s retail sales were given an upward revision of 0.1 percent to show no change over August, the U.S. Commerce Department reported.
Fourth-quarter spending kicked off on a strong note, wrote Jennifer Lee, senior economist at BMO Capital Markets.
“Not bad for a month that saw the government closed for half of it, and consumer confidence taking a hit,” she wrote. She added that a 7.3 percent unemployment rate and cheap gasoline helped.
Excluding gasoline, automobiles and building materials, so-called “core” retail sales climbed 0.5 percent. Core sales have been up for 16 months in a row, noted Brian Wesbury, chief economist of First Trust Portfolios LP.
Diane Swonk, chief economist at Mesirow Financial, attributed much of the gains to retail discounting “in what is likely to be a precursor to one of the most promotional holiday seasons since the onset of the financial crisis,” she wrote.
Swonk predicted that cheaper gas, down more than 10 percent from a year ago, could help boost consumer holiday spending. The sharp decline in sales of building material, garden equipment and supplies (down 1.9 percent from September) could signal that a trend in remodeling might be waning.
Robert Dye, chief economist at Comerica Bank, said a 1.4 percent rise in auto and other vehicle sales suggested pent-up consumer demand and gave cause for optimism going into the final two months of the year. Dye also pointed to the declining price of gasoline as good news for retailers in general.
“It’s more money available in the hands of consumers to spend on things other than gasoline,” Dye said.
He was optimistic about Christmas shopping.
“My expectation is that we have what I call a moderately strong holiday season,” he said.