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

Cheaper Gasoline

While cheaper gasoline may have bolstered Americans’ willingness to spend, the lower cost for fuel hurt receipts at filling stations, which declined 0.6% in October, today’s figures showed. The Commerce Department’s retail sales data aren’t adjusted for changes in prices.

The gain in October sales excluding service stations was the biggest in four months.

A gallon of regular gasoline at the pump averaged $3.34 in October, down from $3.51 the previous month, according to AAA, the biggest U.S. auto group. It dropped to $3.18 on November 11, the lowest level since February 2011.

The figures used to calculate GDP, which exclude categories such as food services, auto dealers, home-improvement stores and service stations increased 0.4% in October after rising 0.3% the prior month.

Consumer Spending

Household spending will grow at a 2.1% annualized rate in the last three months of the year, according to the median forecast of economists surveyed by Bloomberg this month. It expanded at a 1.5% pace in the third quarter, the weakest performance in two years.

Cincinnati-based Macy’s, the second-largest U.S. department-store company, this month reported fiscal third- quarter profit rose 22% from the year before.

Revenue was particularly strong in October, and the company is “entering the fourth quarter with confidence,” Chief Executive Officer Terry Lundgren said in a Nov. 13 statement.

Department-store sales increased 0.5% in October, the biggest gain since July 2012, today’s figures showed. Purchases at clothing outlets advanced 1.4%, the most in six months. Receipts at sporting goods, book and music stores rose 1.6%, the most since March 2012.

Sales at electronics and appliance stores climbed 1.4% in October, the most since April. Purchases of electronics probably got a boost from the Sept. 20 release of Apple Inc.’s two new iPhones models. The company sold a record 9 million iPhones in the weekend debut that included China among overseas markets.

Holiday Sales

Sales in November and December account for 20% to 40% of U.S. retailers’ annual revenue and 20% of their profit, according to the National Retail Federation, a Washington-based trade group.

Higher home and equity prices may help consumers feel more comfortable about spending. The Standard & Poor’s 500 Index reached a record close last week and has risen 25.4% this year through yesterday.

At the same time, home prices have continued to rise, reflecting improving demand and tight inventories. Home prices in 20 U.S. cities rose 12.8% in August from a year ago, the most since February 2006, according to the S&P/Case-Shiller index of property prices.

Today’s figures showed furniture sales jumped 1% in October after climbing 0.7%.

Changes in consumer spending, among other indicators, will help Federal Reserve policy makers gauge the strength of the U.S. expansion before paring the pace of asset buying from $85 billion a month. The Federal Open Market Committee is expected to release minutes from its Oct. 29-30 meeting today at 2 p.m.

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