WASHINGTON — Retail sales posted a 0.4% increase in October, and ex autos were up 0.2%, ex-autos and gas grew 0.3%. These were all better than expected in a good start to Q4 that shows little impact from the government's temporary closing.
Sales were boosted by a 1.0% rise in furniture, a 1.4% increase in electronics, a 0.5% gain in healthcare, a 1.6% jump in sporting goods, 1.4% growth in clothing, and a 1.0% gain in restaurants. Core sales (ex-auto, gas, and building materials) were up 0.5%, also suggesting Q4 is off to a good start.
Reliability of the estimates was not impacted by the October government closing, though we suspect the extra time allowed for preparation of the report means there will not be much revision ahead. In fact given the strength of the numbers, one wonders if workers on temporary layoff went to the mall instead of pulling back.
In other areas, motor vehicles and parts posted a 1.3% increase even though unit new auto sales were flat. Preliminary data do not break down new and used vehicle sales from parts.
Weak spots were gasoline at a 0.6% decline, where lower pricing had an impact. Also, building materials were down 1.9%, but without explanation.
The bottom line is that real sales were rising at the start of Q4, suggesting the economy was accelerating. Holiday sales represent the bulk of retailer volume and profits, however, and we must await further data before concluding that Q4 was a success.
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