U.S. retail sales declined in October, but consumers cut purchases of household goods and big-ticket clothing, which could dampen expectations for a strong holiday shopping season.
The Department of Commerce said retail sales on Friday increased 0.3% last month, lifted by motor vehicle purchases and higher gasoline prices, and reversed September's unannounced fall of 0.3%, which was the first decline in seven months.
Economists polled by Reuters had predicted that retail sales would rise 0.2% in October. Compared to October last year, retail sales rose 3.1
Excluding cars, gasoline, construction products and carpet services, retail sales increased 0.3% last month. Data for September was revised lower to show that core sales were slipping 0.1% instead of unchanged as previously reported. Core retailing is the closest match to the consumer spending portion of gross domestic product.
The large retreat in core sales was added to reports this week showing tighter inflation in supporting the Federal Reserve signal that it is unlikely to cut interest rates again in the near term. Other reports this month have shown solid job growth in October and an acceleration in the activity sector's activity.
The data and the easing of trade tensions between Washington and Beijing have reduced fears of the financial market for a recession. Fed leader Jerome Powell told lawmakers Thursday that "the US economy is the star economy these days," compared to other advanced economies, and "there is no reason why it cannot continue."
Last month, the US central bank cut interest rates for the third time this year, signaling a break in the relief cycle that began in July when it reduced borrowing costs for the first time since 2008.
Consumer spending, which accounts for more than two-thirds of the economy, increased at a 2.9% annual interest rate in the third quarter. The economy's engine is driven by the lowest unemployment rate in nearly 50 years and has helped halt the White House economy's 16-month trade war with China, which had led to a fall in capital spending and a recession in production.
Car sales increased by 0.5% in October after falling 1.3% in September. Receipts at gas stations rose 1.1%, reflecting higher gasoline prices, after dipping 0.1% last month. Online retail and mail order sales increased 0.9% after rising 0.2% in September.
But sales in electronics and hardware stores fell 0.4%. Receipts in hardware stores fell 0.5% and sales in clothing stores fell 1.0%. Consumption in furniture stores fell 0.9%, the largest decline since December 2018.
Americans also cut spending on restaurants and bars, with sales falling 0.3%, most in almost a year. Spending on hobby, musical instrument and bookstores dropped 0.8%.