WASHINGTON (Businesshala) – US retail sales rose more than expected in October, likely as Americans start their holiday shopping early to avoid empty shelves amid shortages of some goods due to the ongoing pandemic, the fourth The economy was given a lift at the start of the quarter. ,
Retail sales rose 1.7% last month, the Commerce Department said Tuesday. Data for September was revised to show a 0.8% increase in retail sales instead of 0.7% as previously reported. Sales have now grown for three consecutive months.
Economists polled by Businesshala had forecast retail sales to grow 1.4%. Estimates ranged from a drop of at least 0.1% to a high of 2.8%.
Unit Motor Vehicle sales increased for the first time in six months in October. Tight supplies of automobiles due to global semiconductor shortages have driven up automotive prices, driving retail sales up in the past month. Retail sales were also boosted by higher petrol prices.
Consumer prices rose 0.9% in October. The shortage could have prompted consumers to anticipate even higher prices and make a quick purchase.
“Supply shutdowns and retailers suggest encouraging shoppers to start holiday shopping early,” said Sam Bullard, a senior economist at Wells Fargo in Charlotte, North Carolina. “Regardless, holiday sales are almost certainly going to hit records a year ago, even as retailers face a unique set of challenges.”
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 fading headwind from the rise in COVID-19 infections in the summer is reviving economic activity.
The report linked an uptick in services sector activity in October to paint an upbeat picture of the economy after strong employment growth and GDP, which grew at 2.0% in the previous quarter, the slowest pace in more than a year.
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.”