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MONEY
Retail sales

Retail sales surged in October

Paul Davidson
USA TODAY

Retail sales rose sharply in October and a core reading rebounded strongly after several sluggish months, raising hopes that consumer spending will support solid economic growth in the current quarter.

Sales increased 0.8%, above the 0.6% economists expected. Excluding autos, gasoline, food services and building materials -- which are all considered volatile -- sales jumped 0.8%, double the 0.4% economists had forecast. Also encouraging: The increase in September retail sales was revised up substantially to 1% from 0.6%

Shoppers generally have spent more freely this year amid solid job and wage growth, cheap gasoline and reduced debt. But core sales lost steam in recent months, with some economists citing uncertainty tied to the US presidential election. But economist Paul Ashworth of Capital Economics says Tuesday's encouraging report "suggests that households were not unduly concerned by the upcoming presidential election."

"We had been a little concerned by the recent weakness in underlying sales, but October’s strength suggests that was nothing more than a temporary blip," Ashworth wrote in a note to clients.

In October, auto sales increased 1.1%, and rising pump prices pushed up gasoline station sales by 2.2%

Sales also increased 1.3% at sporting good stores, 0.8% at health and personal care stores, 0.6% at clothing outlets, 0.4% at general merchandise stores, and 1.5% online.

Those more than offset declines of 0.9% at furniture stores and 0.7% at restaurants and bars.

Consumer spending makes up about 70% of economic activity, and the Federal Reserve is expected to scrutinize Tuesday’s report as it weighs an anticipated interest rate hike at a meeting next month. The Fed has held its key rate steady’s lifting it in December for the first time in nine years.

A core measure of retail sales has been listless in recent months.
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