Retail sales in the U.S. shot up by more than expected in the month of October, according to a report released by the Commerce Department on Tuesday.
The Commerce Department said retail sales spiked by 1.7 percent in October after climbing by an upwardly revised 0.8 percent in September.
Economists had expected retail sales to jump by 1.4 percent compared to the 0.7 percent increase originally reported for the previous month.
“An improving Covid situation, easing supply constraints in the auto sector and an early start to holiday shopping all boosted purchases last month,” said Gregory Daco, Chief U.S. Economist at Oxford Economics.
He added, “Households were still willing to open their wallets in the face of higher prices – which inflated nominal sales figures – but there is increasing evidence that higher inflation is eroding purchasing power.”
The report showed sales by motor vehicle and parts dealers soared by 1.8 percent in October after shooting up by 1.2 percent in September.
Excluding the jump in sales by motor vehicles and parts dealers, retail sales still surged up by 1.7 percent in October after rising by 0.7 percent in September. Ex-auto sales were expected to advance by 1.0 percent.
Sales by non-store retailers, gas stations and electronics and appliance stores all saw substantial growth during the month.
The report also showed significant increases in sales by building materials and supplies dealers, miscellaneous store retailers and department stores.
Closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, also jumped by 1.6 percent in October after climbing by 0.5 percent in September.
“As the economy heads into 2022, an improving health situation should reinvigorate consumer confidence while a strengthening jobs recovery and strong wage gains should support income growth,” Daco said.
He added, “Healthy household finances along with some $2.5tn in excess savings should support consumer spending growth above 4% in 2022, following an expected 8% advance in 2021.”
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