- Retail sales rose by 0.3% in October, rebounding from a 0.3% decline in September and coming in ahead of the median consensus forecast for a 0.2% increase.
- Gains were concentrated in autos & parts dealers (up 0.5%) and gasoline stations (up 1.1%). These were tempered by declines in food services & drinking places (down 0.3%), and building material & garden equipment stores (down 0.5%).
- Sales in the retail sales “control group,” which excludes more volatile components (gas, autos, building materials and food services) came in at 0.3%, in-line with market expectations.
- The increase in the control group reflected a mixed performance among the underlying subcategories. The main bright spot here was non-store retailers, which includes online sellers. They were up 0.9% m/m and were up 14.3% from the previous year, the highest of any major group. General merchandise stores were also up 0.4%.
- The remaining categories largely registered declines. Electronics & appliance stores were down 0.4%, clothing & clothing accessories stores down 1.0%, sporting goods stores down 0.8% and miscellaneous stores down 0.6%. Health & personal care stores remained unchanged on the month.
Key Implications
- After a bit of a stumble in September, the American consumer returned to form in October. While the high bar for consumption growth that was set in the previous quarters will be a tough act to follow, a solid start to fourth-quarter retail sales suggests that consumers will remain an integral part of the economic growth story. Overall, real consumer spending is on track to slow from nearly 3% (annualized) in Q3, to a still-decent 2.0% to 2.5% in Q4.
- A still-robust job market and solid wage gains should continue to underpin spending. The prospects of some resolution on the trade front could also boost consumer confidence and help to further buoy spending.
