Cars drive US retails' rise
October marked fourth straight month of better sales but consumers struggle with jobless rate stuck at 9.6pc
Published 16/11/2010 | 05:00
A surge in auto purchases helped lift US retail sales in October by the largest amount in seven months. But excluding autos, retail sales rose more modestly.
October marked the fourth straight increase in retail sales after declines in May and June. Those drops had raised fears about the economic recovery.
Still, economists say consumers probably aren't spending enough to lift sales growth above the lacklustre pace of the past six months.
Consumers are still struggling with scant income gains, high debts and painfully high unemployment, which remains stuck at 9.6pc even though the recession ended more than a year ago.
Paul Dales, US economist at Capital Economics, interpreted October's retail sales as a sign that consumption growth was improving.
He cautioned that spending remained too tepid to drive economic growth higher in the current quarter. Consumer spending is closely watched because it accounts for 70pc of US economic activity.
Overall retail sales rose 1.2pc in October, the Commerce Department said yesterday. That was nearly double the gain that had been expected and the largest increase since March. But excluding autos, sales rose 0.4pc.
In a second report, the government said inventories held by businesses grew 0.9pc in September. It was the ninth straight monthly gain. And total business sales rose 0.5pc, the best showing since July.
Steadily higher inventories and sales are seen as signs that the economic recovery will continue. Inventory rebuilding has provided support for the economy.
For October, sales at auto dealerships rose 5pc. That gain had been expected because of reports from automakers that October auto sales rose to an annual rate of 12.3 million units.
That increase was the best monthly showing since the government's 'Cash for Clunkers' programme sent sales surging in August 2009.
Outside of autos, sales at general merchandise stores, a category that includes department stores and big chains such as Wal-Mart, rose 0.2pc in October after a slight 0.1pc rise in September.
Sales at specialty clothing stores fared better, rising 0.7pc after having fallen 0.4pc in September.
America's big retailers had reported lacklustre sales in October. Analysts ascribed some of the blame to an unusually warm October that lured shoppers away from the malls.