Re­tail sales jump 0.8% in sign of con­sumer health

Daily Local News (West Chester, PA) - - BUSINESS - By Christo­pher S. Ru­gaber AP Eco­nom­ics Writer

WASH­ING­TON » Amer­i­can con­sumers ramped up their spend­ing last month in a sign of ro­bust health head­ing into the cru­cial hol­i­day shop­ping sea­son.

Re­tail sales rose 0.8 per­cent in Oc­to­ber, af­ter an up­wardly-re­vised 1 per­cent gain in Septem­ber, the Com­merce Depart­ment said Tues­day. The two-month in­crease was the largest since the spring of 2014.

The num­bers sug­gest that the econ­omy may grow more quickly in the fi­nal three months of the year than many economists had ex­pected. Re­tail sales are closely watched as a sign of con­sumer health. Con­sumer spend­ing makes up about 70 per­cent of the econ­omy.

Steady hir­ing and emerg­ing signs of solid pay in­creases have made Amer­i­cans more con­fi­dent and will­ing to spend. The un­em­ploy­ment rate fell last month to a low 4.9 per­cent and in Oc­to­ber, work­ers saw the big­gest an­nual pay gain since the end of the re­ces­sion.

And while many com­pa­nies, such as Dunkin Donuts, blamed their own weak sales fig­ures in the late sum­mer and fall on con­sumer con­cerns sur­round­ing the elec­tion, Tues­day’s fig­ures show that the pres­i­den­tial cam­paign had lit­tle im­pact over­all.

“If elec­toral un­cer­tainty were re­strain­ing ac­tiv­ity prior to last Tues­day, it is nowhere ap­par­ent in the con­sumer spend­ing data,” JPMor­gan Chase econ­o­mist Michael Feroli said.

Re­vi­sions to Septem­ber and

Au­gust data in­di­cate that con­sumers spent more than pre­vi­ously es­ti­mated in the July-Septem­ber quar­ter, Feroli said. That means growth in the third quar­ter may have been as high as 3.2 per­cent, he es­ti­mated, above the 2.9 per­cent fig­ure re­ported last month.

Some of the big­gest sales

in­creases were in au­tos and gas, with higher prices boost­ing gas sta­tion sales. Even ex­clud­ing those cat­e­gories, how­ever, sales rose 0.6 per­cent in Oc­to­ber and 0.5 per­cent the pre­vi­ous month.

Auto sales rose a healthy 1.1 per­cent, though many deal­ers re­lied on steep dis­counts. Sales of home and gar­den sup­plies also rose 1.1 per­cent in Oc­to­ber, a pos­i­tive sign that more Amer­i­cans are re­mod­el­ing and ex­pand­ing

their homes.

Home De­pot, the na­tion’s big­gest home im­prove­ment chain, upped its out­look for the year Tues­day af­ter beat­ing Wall Street ex­pec­ta­tions hand­ily. Cus­tomer trans­ac­tions jumped, as did the amount they spent on each visit, the com­pany said.

Most other re­tail­ers also saw healthy in­creases: Gro­cery stores, health and per­sonal care out­lets, sport­ing goods re­tail­ers, cloth­ing stores, and on­line and cat­a­log

re­tail­ers all re­ported strong sales.

On­line and cat­a­log re­tail­ers are con­tin­u­ing to seize mar­ket share from old­er­line out­lets such as depart­ment stores. On­line and cat­a­log sales have in­creased 12.9 per­cent in the past year, much faster than the 4.3 per­cent gain for all re­tail­ers. Depart­ment stores, mean­while, have seen their sales plunge 7.3 per­cent in the past 12 months.

Fur­ni­ture stores were

one of the few to re­port a drop in Oc­to­ber, with sales fall­ing 0.9 per­cent.

Steady hir­ing may be boost­ing spend­ing. Em­ploy­ers have added about 175,000 jobs a month this year, down from last year’s pace but still enough to push un­em­ploy­ment even lower over time.

That ap­pears to be boost­ing con­sumer con­fi­dence, which has been mostly healthy in re­cent months. A mea­sure of con­sumer sen­ti­ment

by the Univer­sity of Michi­gan rose in the first half of Novem­ber.

Even with solid growth in the Oc­to­ber-De­cem­ber quar­ter, the econ­omy has been weak this year. It ex­panded at just a 1.1 per­cent pace in the first six months of 2016. It ac­cel­er­ated to a 2.9 per­cent pace in the Ju­lySeptem­ber quar­ter.

Even with a health­ier ex­pan­sion in the fourth quar­ter, growth may not reach 2 per­cent for the full year.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.