The most recent data shows that sales at US retailers rose in the month of October, showing a broad advance after an impressive September that performed significantly better than originally expected. Now experts are saying that this is a sign consumers are spending more confidently.
More accurately, October sales rose just 0.8 percent after an upwardly revised 1 percent jump from September. This marks the biggest back-to-back gains of this type since the March-April period of 2014, says the US Commerce Department, on Nov. 15.
A Bloomberg News survey called only for a 0.6 percent gain, which should not be overlooked because retail sales over the past 12 months have been up higher than in the past two years. Experts say that healthy hiring, wage growth, and limited inflation are all contributing to the increased consumer confidence that leads to more spending at stores, malls, and on the internet. This, of course, builds a momentum; in this case, the momentum began at the top of the quarter, boding well for household purchases (and that accounts for roughly 70 percent of the entire economy) as we approach the holiday shopping season.
Accordingly, Barclays chief US economist, Michael Gapen, of New York, says, “The consumer is in good shape. The pace of household spending is fairly solid. We expect a slight acceleration this quarter from the third-quarter rate.”
Right now, Bloomberg survey estimates that total retail sales gains ranged from 0.3 percent to 1.2 percent after having reported the 0.6 percent rise from the month prior. Similarly, retail receipts increased by 4.3 percent over October from the year before; this is the biggest increase since November of 2014.
As such, Jeffries senior economist Tom Simons notes, “A strong October following a strong September is encouraging. The labor market continues to be strong, and wage growth appears to be accelerating.”
Overall, sales improved in 11 of 13 major categories—and for the second straight month—in October. This includes the biggest advance we have seen in five months among internet retailers as well as the strongest month for apparel chain stores since February.
In addition, MUFG chief economist Chris Rupkey comments, “This is just the kind of data the Fed doves need to see to convince them to hike rates in December. The economy is doing pretty well, this data is bullish for the economic outlook in the months ahead.”