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US retail sales rebound, but big-ticket purchases drop
[WASHINGTON] US retail sales rebounded in October, but consumers cut back on purchases of big-ticket household items and clothing, which could temper expectations for a strong holiday shopping season.
The Commerce Department said on Friday retail sales increased 0.3 per cent last month, lifted by motor vehicle purchases and higher gasoline prices, reversing September's unrevised 0.3 per cent drop, which was the first decline in seven months.
Economists polled by Reuters had forecast retail sales gaining 0.2 per cent in October. Compared to October last year, retail sales advanced 3.1 per cent.
Excluding automobiles, gasoline, building materials and food services, retail sales increased 0.3 per cent last month. Data for September was revised lower to show the so-called core retail sales slipping 0.1 per cent instead of being unchanged as previously reported. Core retail sales correspond most closely with the consumer spending component of gross domestic product.
The rebound in core retail sales added to reports this week showing firming inflation in supporting the Federal Reserve's signal that it will probably not cut interest rates again in the near term. Other reports this month have shown solid job growth in October and an acceleration in services sector activity.
The data and easing trade tensions between Washington and Beijing have diminished financial market fears of a recession. Fed Chair Jerome Powell told lawmakers on Thursday that "the US economy is the star economy these days," compared to other advanced economies and "there's no reason that can't continue."
The US central bank last month cut rates for the third time this year and signaled a pause in the easing cycle that started 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 per cent annualised rate in the third quarter. The economy's engine is being powered by the lowest unemployment rate in nearly 50 years and has helped to blunt the hit on the economy from the White House's 16-month trade war with China, which had led to a decline in capital expenditure and a recession in manufacturing.
Auto sales increased 0.5 per cent in October after declining 1.3 per cent in September. Receipts at service stations surged 1.1 per cent, reflecting higher gasoline prices, after dipping 0.1 per cent in the prior month. Online and mail-order retail sales increased 0.9 per cent after gaining 0.2 per cent in September.
But sales at electronics and appliance stores fell 0.4 per cent. Receipts at building material stores dropped 0.5 per cent and sales at clothing stores declined 1.0 per cent. Spending at furniture stores fell 0.9 per cent, the largest decline since December 2018.
Americans also cut back on spending at restaurants and bars, with sales falling 0.3 per cent, the most in nearly a year. Spending at hobby, musical instrument and book stores dropped 0.8 per cent.