Retail sales in U.S. increased more than forecast in October

Retail sales in the U.S. rose more than forecast in October, a sign that consumer spending was resilient even during the government shutdown.

The 0.4% increase was the most in three months and followed no change in September, Commerce Department figures showed today in Washington. The median forecast of 86 economists surveyed by Bloomberg called for a 0.1% October advance. Sales excluding gasoline climbed 0.5%.

Fuel costs near their lowest levels in more than two years and household wealth boosted by rising stock and home prices may keep underpinning consumers’ ability to buy. The pickup boosts the outlook for retailers such as Macy’s Inc. heading into the holiday-shopping season.

“Maybe the rhetoric was just a little bit overblown in terms of the magnitude of the economic impact behind the partial government shutdown,” said Michael Brown, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina. The firm is the best forecaster of retail sales during the last two years, according to data compiled by Bloomberg. “As we get ready to go into the holiday shopping season, this is welcome news.”

Estimates in the Bloomberg survey ranged from a decline of 0.3% to a gain of 0.7%. The reading for September was revised from an initially reported 0.1% decrease.

Stock-index futures rose after the sales data and a separate report showing consumer prices declined. The contract on the Standard & Poor’s 500 Index expiring in December increased 0.2% to 1,788.3 at 8:46 a.m. in New York.

Consumer Prices

The consumer-price index dropped 0.1%, reflecting cheaper energy, clothing and new cars, after a 0.2% gain the prior month, the Labor Department said.

The retail figures showed nine of 13 major merchant categories showed increases last month, led by the gains at auto dealers, department stores, clothing outlets and electronics establishments.

Sales at automobile dealers advanced 1.3% after falling 1.2% in September, today’s report showed.

Industry figures, which are the ones used to calculate economic growth, showed cars sold at a 15.15 million pace in October, down from 15.21 in September, according to data from Ward’s Automotive Group. While demand has cooled from an almost six-year high 16-million pace in August, automakers remain on track to have their best year since 2007.

General Motors Co. and Ford Motor Co. reported U.S. sales gains for October from a year earlier as showroom traffic and sales accelerated after Congress and President Barack Obama agreed to fund the government and lift the debt limit, automakers said.

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