U.S. retail sales rose more than expected in October, almost equaling the previous month’s growth amid strong demand for cars and a surge in online shopping.
The Commerce Department said retail sales increased 0.8% last month after gaining a revised 1.0% in September. Economists had been expecting growth to slow to 0.6% in October.
“Core” sales, excluding automobiles, gasoline, building materials, and food services, jumped 0.8%, beating forecasts of a 0.3% gain.
The retail sales gains in September and October mark the best two-month stretch of sales in at least two years. “The consumer is in very good shape and is poised to continue to lead the economy forward based on rising wages, low unemployment and clean balance sheets,” Stephen Stanley, chief economist at Amherst Pierpont, said in a note to clients.
Consumer spending accounts for more than two-thirds of economic output in the U.S. According to BBC News, the October data is “the latest evidence that the U.S. economy is growing strongly and adds to speculation that there could be an interest rate rise next month.”
“This is just the kind of data the Fed doves need to see to convince them to hike rates in December,” Chris Rupkey, chief economist at MUFG Union Bank, told Reuters.
Retail sales last month were driven by a 1.1% increase in auto sales, a 1.5% surge in receipts at online retailers, and a 2.2% increase at service stations due to rising gasoline prices. Spending grew across a range of items, including construction materials, groceries and health care products, though consumers cut spending at furniture stores, department stores and restaurants.
Over the past 12 months, spending at retailers has increased 4.3%, the biggest annual gain in almost two years.
“As uncertainty over the election outcome remains elevated, October’s retail sales performance provides some comfort that the primary driver of U.S. GDP growth remains on solid footing,” said Sam Bullard, a senior economist at Wells Fargo Securities.