U.S. retail sales increased by 1.7% in October
U.S. retail sales increased by 1.7% m/m in October marking the largest gain in seven months. KPMG Senior Economist Ken Kim discusses key takeaways from this month’s report.
October retail sales increased by 1.7 % on a month-to-month basis beating market expectations for a 1.4 % increase and posting its largest gain in seven months. The October report showed broad-based strength across most categories. Online sales showed the biggest increase rising by four percent over September and even motor vehicle sales increased by near two percent although this is coming off a low base. There were some waning impacts of the recent delta wave surge. Sales at health and beauty care stores were down for the second consecutive month as social activities were put on hold and sales at restaurants and bars were unchanged in October. Our takeaway is that consumer spending is showing resiliency in the face of higher inflation and supply constraints, which is good news for the holiday shopping season. This supports our view that economic growth will bounce back in the fourth quarter after hitting a delta speed bump in Q3.
Retail sales experience largest gain in 7 months
Consumer spending is showing signs of resilience—just in time for the holidays.
Monthly retail sales beat market expectations, jumping 1.7 percent in October, according to today’s report from the U.S. Commerce Department. This is the largest gain since March.
Coming off a slow third quarter, the data is a welcome sign that the economy could be getting back on track in time for the biggest shopping season of the year.
Rebounding confidence in the face of real concerns
Inflation worries and supply constraints have dominated recent headlines. But despite these barriers, consumers are still spending. In fact, concerns appear to be spurring consumers to absorb higher prices and even get a jump on their holiday shopping.
These trends are strengthening sales across categories. The October report shows broad-based gains, with online sales recording the biggest pop: 4 percent over September.
Even motor vehicle sales—down for four straight months due to a semiconductor shortage—showed a near 2 percent increase.
Brightening economic outlook for the season ahead
The solid retail sales report supports our view that economic growth will bounce back in the fourth quarter. It’s a needed lift for the economy, which suffered a speed bump in recent months due to uncertainties over the COVID-19 Delta variant, which continued to put some social activities on hold.
While the bright spots stand out, some waning impacts of the recent Delta wave surge persist. Health and personal care store sales experienced a second consecutive month of decline, apparel store sales dropped by 0.7%, and sales at restaurants and bars remain unchanged.