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US retail sales barely rise as auto purchases fall
[WASHINGTON] US retail sales rose less than expected in October amid a surprise decline in automobile purchases, suggesting a slowdown in consumer spending that could temper expectations of a strong pickup in fourth-quarter economic growth.
The Commerce Department said on Friday retail sales edged up 0.1 per cent last month after being unchanged in September.
Economists polled by Reuters had forecast retail sales increasing 0.3 per cent in October after a previously reported 0.1 per cent increase in September.
Sales at auto dealerships fell 0.5 per cent last month after rising 1.4 per cent in September. The decline is surprising given that motor vehicle manufacturers reported strong sales for October.
Retail sales excluding automobiles, gasoline, building materials and food services rose 0.2 per cent after an upwardly revised 0.1 per cent gain in September. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
Core retail sales previously were reported to have dipped 0.1 per cent in September. Economists had forecast core retail sales rising 0.4 per cent last month.
The lackluster report suggests that savings from cheaper gasoline are being used to pay rents, which have increased substantially over the past year.
Still, the weak spending tone is unlikely to significantly shift expectations that the Federal Reserve will raise interest rates next month in the wake of October's robust employment report. The US central bank has kept its benchmark overnight interest rate near zero since December 2008.
Economic growth slowed to a 1.5 per cent annual pace in the third quarter as businesses worked through an inventory glut and energy companies continued to cut back spending in response to lower oil prices.
Retail sales also were held back by a 0.9 per cent drop in the value of sales at service stations, which reflected lower gasoline prices. Service station receipts fell 4.0 per cent in September.
Clothing store sales were flat last month. Receipts at building materials and garden equipment stores rose 0.9 per cent, while sales at furniture stores increased 0.4 per cent.
Receipts at sporting goods and hobby stores gained 0.4 per cent and sales at restaurants and bars rose 0.5 per cent. Sales at electronics and appliance stores fell 0.4 per cent. Sales at online stores increased 1.4 per cent.