U.S. retail sales accelerate in strong boost to economy

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WASHINGTON (Businesshala) – US retail sales rose in October, likely as Americans begin their holiday shopping early to avoid empty shelves amid shortages of some goods due to the ongoing pandemic, helping the economy begin the fourth quarter. I got a lift.

FILE PHOTO: Shoppers wait in line to enter a Chanel store at 57th St in New York City, US, May 24, 2021. Businesshala/Brendan McDiarmid

A solid report from the Commerce Department on Tuesday suggested that high inflation is yet to dampen spending, and its slowing after strong job growth in October and an uptick in service sector activity paint an upbeat picture of the economy. increased from. More than a year in the third quarter.

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“Strong gains in employment, wages and wealth, as well as increased savings for many households, have compensated for impacting inflationary costs,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “For now, both consumers and the economy, overall, want to put the year on a high note.”

Retail sales jumped 1.7% last month after rising 0.8% in September. Sales have now grown for three consecutive months. Economists polled by Businesshala had forecast retail sales to grow 1.4%. Sales in October grew 16.3 per cent year-on-year.

The broader increase in sales was driven by motor vehicles, with receipts at auto dealerships rising 1.8% after rising 1.2% in September. The increase reflects an increase in unit sales as well as higher prices. Unit automotive sales rose for the first time in six months in October.

The tight supply of automobiles due to global semiconductor shortages has driven up motor vehicle prices.

comprehensive benefits

Retail sales were also boosted by higher petrol prices, with receipts at service stations rising by 3.9%. Consumer prices rose 0.9% in October. The shortage may have prompted consumers to anticipate even higher prices and encouraged them to shop early. Online retail sales jumped 4.0%.

Receipts at building material shops increased by 2.8% and sales at furniture shops increased by 0.4%. Receipts on sporting goods, hobbies, musical instruments and bookstores also increased. Electronics and appliance stores sales grew 3.8 percent. But sales at clothing stores fell 0.7%.

Sales across restaurants and bars remained unchanged despite a decline in COVID-19 infections driven by the Delta variant. Restaurants and bars are the only service category in the Retail Sales report. The nearly two-year-long coronavirus pandemic has caused severe labor shortages, delaying the delivery of raw materials to factories and shipments of finished goods to markets.

Excluding automobiles, gasoline, building materials and food services, retail sales rose 1.6% last month after rising 0.5% in September. These so-called core retail sales correspond most closely to the consumer spending component of GDP.

Retail sales are mostly made up of goods, with services including healthcare, education and hotel accommodation, making up the remainder of consumer spending.

Even when adjusted for inflation, retail sales grew solid last month, driving the pace of growth in consumer spending more than a modest 1.6% annualized rate in the third quarter. The slowing down of the rise in corona virus infections during the summer is reviving economic activity. The economy grew at 2.0% in the last quarter.

As companies scramble to fill 10.4 million open jobs by the end of September, salaries have been slashed. But high inflation is eroding those benefits for some workers, which helped propel consumer sentiment to a 10-year low in early November.

Still, economists don’t believe the decline in sentiment reported by the University of Michigan last Friday will dampen consumer spending, given that other sentiment measures were well above pre-pandemic levels. Americans saved at least $2 trillion in additional savings during the pandemic.

Scott Hoyt, a senior economist, said, “This continued weakness in confidence does not warrant an immediate change in our near-term forecast for consumer spending because other factors are more important, particularly real disposable income, which remains high. is stable.” at Moody’s Analytics in West Chester, Pennsylvania. “Support also comes from strong job growth, plentiful jobs and abundant cash available to many.”

Reporting by Lucia Muticani; Editing by Chizu Nomiyama and Andrea Ricci

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