American consumers ate out and shopped for clothes in October, enjoying a windfall from cheaper gasoline and prompting a rebound in retail sales heading into the holiday-shopping season.
Purchases increased 0.3% after a 0.3% drop in September, the Commerce Department reported in Washington. The median forecast in a Bloomberg News survey of 86 economists projected a 0.2% advance. Eleven of 13 major categories showed gains, indicating broad-based growth.
The lowest gasoline since 2010 and rising stock and home values are boosting consumer confidence and disposable income, raising the odds that spending will continue to improve through year-end. Falling unemployment also means more Americans have extra cash, brightening the outlook for holiday sales even as bigger wage gains have been slow to materialize.
“It’s good news,” said Guy Berger, a U.S. economist at RBS Securities Inc. in Stamford, Connecticut, who is among the top retail-sales forecasters over the past two years, according to data compiled by Bloomberg. “Paychecks are actually getting a little bigger, more people have jobs and, in inflation-adjusted terms, people have more in their wallets and they’re willing to spend it.”
Estimates in the Bloomberg survey ranged from a decline of 0.3% to a 0.6% gain. September’s reading was unrevised.
The Commerce Department’s retail sales figures used to calculate gross domestic product, which exclude categories such as food services, auto dealers, home-improvement stores, and service stations, climbed 0.5% in October after being little changed the prior month. The September reading was revised up from a previously reported 0.2% decrease.
The 1.9% increase in demand at non-store retailers, which include online merchants, was the biggest since March. Restaurants, sporting goods, clothing and pharmacies were among the other categories showing pickups in demand.
Sales at auto dealers climbed 0.5% last month, according to today’s report.
Industry data showed spending on cars and light trucks was little changed in October at a 16.4 million annualized pace after a 16.3 million rate the prior month, according to Ward’s Automotive Group. Sales at Ford Motor Co., Toyota Motor Corp., Fiat Chrysler Automobiles NV and Nissan Motor Co. exceeded analysts’ estimates in October as buyers emboldened by falling gasoline prices flocked to sport-utility vehicles.
While cheaper fuel may be boosting household sentiment, lower prices result in smaller receipts at service stations because the data aren’t adjusted for inflation. Purchases dropped 1.5% in October after declining 0.8% a month earlier, today’s figures showed.
Receipts will probably continue to retreat this month. A gallon of regular gasoline fell to $2.92 on Nov. 12, the lowest level since December 2010, according to AAA, the biggest U.S. auto group.
The only other retail group to suffer a decrease in sales last month was electronics stores, which showed a 1.6% drop. That followed a 4.7% surge in September as Apple Inc. released its latest iPhone.
Americans’ views are brightening as a result of lower fuel costs. A gauge of consumers’ perceptions about the world’s largest economy increased last week to the highest level in almost seven years, according to the latest Bloomberg Consumer Comfort Index.
The job market is gaining traction, with job gains on pace for their best performance since 1999 and the unemployment rate at its lowest in more than six years. Employers have added more than 200,000 jobs a month for the past nine months, pushing the unemployment rate to 5.8%.
Job openings were near 13-year high in September, a sign the pickup in hiring can be sustained, according to Labor Department data released yesterday.
Wages and salaries picked up in the third quarter, rising 0.8%, the most in six years, the agency reported Oct. 31. They advanced 2.1% from the same three months last year, the biggest gain since the first quarter of 2009.
Sales at general merchandise outlets were little changed last month, the report showed, as department stores such as J.C. Penney Co. and Macy’s Inc. cope a shift toward online sales as they head into the holidays. Both retailers are planning to open earlier on Thanksgiving day this year in a bid to draw shoppers. Wal-Mart Stores Inc. is making Black Friday, the shopping day after Thanksgiving, a weeklong event this year.
The holiday-shopping season is crucial for merchants. Sales in November and December are expected to account for about 19% of annual revenue, according to the National Retail Federation. The trade group estimates that spending this season will rise 4.1%, more than last year’s 3.1% gain.