U.S. Retail Sales Rebounded in October

Spending at gas stations was up 1.1 %, helping drive overall advance in sales

By guest author Amara Omeokwe from Wall Street Journal

Shoppers check out a new Nordstrom department store in Manhattan in October (caption courtesy by Wall Street Journal)

Americans spent more on shopping in October while pulling back on nonessential items, suggesting consumers’ willingness to buy remained solid but more cautious.

Retail sales—purchases at stores, restaurants and online—rose a seasonally adjusted 0.3% in October from a month earlier, the Commerce Department said Friday, after a drop in September.

“Overall, this isn’t a really strong number, but it should do a lot to soothe the fear that consumers were going to struggle into year end,” said Calvin Schnure, senior economist at Nareit, an organization that represents real estate investment trusts.

Growth in consumer spending—a driving factor in the decadelong U.S. economic expansion—contrasted with another drop in U.S. factory production. A report from the Federal Reserve showed U.S. industrial production fell 0.8 % in October, the third decline in four months.

While the Fed attributed much of the decline to a strike last month at General Motors Co., the decrease points to a broader slowdown in manufacturing across the U.S. and internationally amid global trade tensions.

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Consumer spending at gas stations and at food and beverage stores rose by 1.1 % and 0.5 %, respectively, as shopping for necessities helped drive the overall advance in sales last month.

Spending on big-ticket items in October was mixed. Vehicle sales were up 0.5 %, while furniture and home furnishing sales dropped 0.9 %, the biggest monthly decrease since December 2018, according to the Commerce Department.

Excluding vehicles and gasoline, categories that are often volatile, October sales were up 0.1 %, as Americans spent less on items such as clothing and eating and drinking out.

Robert Frick, corporate economist at the Navy Federal Credit Union, said the pullback in sales of discretionary items suggests consumers wanted to rein in spending.

“I’m in no way speaking about doom in the economy, but the behaviour of the consumer, especially right now, bears parsing and it seems like they are feeling anxious about some things,” Mr. Frick said.

Jon Abt, co-president of Abt Electronics in Glenview, Ill., said sales were up 8 % year-over-year through the end of October, but he senses customers are cautious about the economic outlook. His store carries a range of household items, from appliances and fitness equipment to furniture.

“[Sales] sort of picked up from late summer into the fall. On the year as a whole, we’re in the positive, but the numbers aren’t as great as they were over the last two years,” Mr. Abt said.

October’s overall rise in retail sales was in line with the larger trend this year. While the data can be volatile month to month, sales in the August through October period rose 1.1 % compared with the previous three months, and were up 3.1 % in October from the same month of 2018.

Consumer spending accounts for more than two-thirds of U.S. economic output, and has helped support the U.S. economy this year. A steady labor market, combined with muted inflation and gains in earnings, have encouraged Americans to spend.

Cynthia Phillips Strinich, co-owner of Phillips Toy Mart in Nashville, Tenn., said business is stable and sales this year have been consistent with 2018—a trend she expects to continue into the holiday shopping season.

“We’ve had a cold snap and when that happens that really seems to put people in the mood and they are really starting to buy,” Ms. Strinich said. “We had a great [holiday season] last year, and I think we will again.”

Sales at U.S. non-store retailers—a proxy for purchases made online—were robust, rising 0.9% in October from the previous month and 14.3 % from the prior year, Commerce Department data showed. Online shopping is expected to be a strong driver of holiday sales this year, with more than 41% of consumers planning to make at least half of their purchases that way, according to the Conference Board, a research group.

“Consumers are gearing up for the holidays, with signs indicating they will not reign in their spending,” said Lynn Franco, senior director of economic indicators at the Conference Board, in a statement.

The holiday shopping period is shorter this year, however, with Black Friday falling a week closer to Christmas than in 2018, giving retailers less time to entice shoppers.

October retail sales were up 3.1 % from the same month of 2018. An earlier version of this article incorrectly stated sales were up 3.1 % in the first 10 months of 2019 compared with the same period last year. (Nov. 15, 2019)

“I’m in no way speaking about doom in the economy, but the behaviour of the consumer, especially right now, bears parsing and it seems like they are feeling anxious about some things,” Mr. Frick said.

Jon Abt, co-president of Abt Electronics in Glenview, Ill., said sales were up 8 % year-over-year through the end of October, but he senses customers are cautious about the economic outlook. His store carries a range of household items, from appliances and fitness equipment to furniture.

“[Sales] sort of picked up from late summer into the fall. On the year as a whole, we’re in the positive, but the numbers aren’t as great as they were over the last two years,” Mr. Abt said.

www.wsj.com