Retail sales in the U.S. rose in October for the third consecutive month as it signaled households increasing spending despite the fastest inflation in recent times.
As per Bloomberg news, the overall spending increased by 1.7% in October, the most in the last seven months this year. The commerce department figures showed Tuesday an upward advance of 0.8% in September. After excluding motor vehicles and gas, the sales in October were 1.4% up. These figures do not take into account price adjustment.
The Bloomberg Economists survey for median estimates pointed out a 1.4% advance in retail sales. The 10-year Treasury yield was stagnant despite S&P 500 advancing.
The overall increase in spending has highlighted how rising wages and higher savings have helped Americans sustain a robust spending pace on merchandise. Though retail sales are now well above the pre-pandemic levels, recent inflations which impacted consumer sentiments pose a risk of tempering demands in the future.
Prices have risen the fastest in the U.S. recently compared to the last 30 years. Business is now passing the increasing operating costs to the customers though it is difficult to estimate how much the demands are impacted as the growth figures are not adjusted for inflation. October’s consumer spending data, which is inflation-adjusted, will be released next week.
Strong Results
Results from Home Depot Inc and Walmart Inc. on Tuesday indicated that households are broadly maintaining the strong demand for goods even as purchasing power is squeezed due to higher inflation. Comparable sales at Home Depot, a home-improvement retailer, and Walmart reported better than forecast for the quarter.
According to a Commerce Department report, sales increased in 11 out of 13 categories. Building materials, Electronics, appliance stores, and e-commerce retailers saw a significant surge in sales. The larger than the estimated sales were reflected by holiday shoppers who preponed the gift shopping’s to beat shipping delays.
Motor vehicle and auto parts sales increased by 1.8%. Gas purchases at gasoline stations jumped by 3.9 %, the most since March this year, reflecting the highest price paid by Americans at the pump in seven years.
The sales at Restaurants and bars were the only services that showed little change in October after a subdued increase in September that reflected the pandemic undercurrents.
The report points to a better consumer spending growth in the fourth quarter as it gets off to a good start. In the third quarter, personal consumption had slowed due to shortages, rising prices, delta variant fears, and transportation bottlenecks weighed on spending.
Economists anticipate an increase in consumption in the last quarter of the year as the health and labor situation improves. Group sales used to calculate GDP and exclude food services, gasoline stations, building materials stores, and auto dealers advanced by 1.6%.
