Less Than Expected US Retail Sales Disappointing in October

Retail sales statistics in the United States climbed at a slower pace than expected in October as automobile purchases made an unexpected downturn that same month, as both now serve as the main variables that could result in slower economic growth in quarter four 2015.

On Friday, other data showed another monthly decline for producer prices as service costs fell. Weak inflation and signs of slowing consumer spending could complicate the Federal Reserve’s decision next month whether to raise interest rates.

The report said retail sales inched up by 0.1% in October, while revised data showed that sales were virtually unchanged in September.

The report on USA retail sales for October is set for release at 8:30 a.m. ET.

Sales at auto dealerships fell 0.5 percent last month after rising 1.4 percent in September. October’s overall figure looked slightly better when the volatile motor vehicle and parts sector, which dropped 0.5 percent, was stripped out. The median forecast of 84 economists surveyed by Bloomberg called for a 0.3 percent gain.

The decline complicates the task of the USA central bank, where officials have been waiting for inflation to rise to a 2 percent annual rate of increase. Sales at general merchandise stores, which include warehouse big-box merchants that also sell gasoline, fell 0.4 percent.

However, J.C. Penney still posted a loss of $137m for the three months to October, compared with a $188m loss past year, and investors sent the firm’s shares down 10%.

Last month’s advance lifted the monthly average so far in 2015 to 206,000. Online sales were up 7.1 percent from a year ago. Building materials and garden equipment sales rose 0.9%, furniture-store sales rose 0.4%, sporting goods/hobby store sales rose 0.4%, and online sales rose 1.4%.

“The uptick that is expected to come from recent job and wage improvements has yet to register in terms of our expected economic and spending growth”, said Jack Kleinhenz, chief economist for the National Retail Federation, adding that consumers should pick up spending heading into the holiday season. There was a separate report released by the Commerce Department which suggested that drag on 3rd quarter growth of inventories weren’t as large as thought initially.