U.S retail sales rebound, but big-ticket purchases drop
U.S retail sales have rebounded last month, but consumers cut back on purchasing big ticket household items and clothing, which could soften expectations for a strong holiday shopping season.
“Consumers are easing off their spendthrift ways from the second quarter and are adopting more prudent attitudes, perhaps still nervous over trade tensions and the slowing of hiring -though that still remains robust,” said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia. “Should these trends continue we will be facing a not-so-merry holiday shopping season.”
Retail sales increased by 0.3% in October, lifted by motor vehicle purchases and higher fuel prices, reversing Septembers unrevised 0.3% drop, which was the first decline in seven months. Compared to October last year, retail sales advanced 3.1%.
The Fed last month cut rates for the third time this year and signalled a pause in the easing cycle that started in July when it reduced borrowing costs for the first time since 2008.
But the cutback in purchases of big-ticket household items casts a cloud on the holiday shopping season, which typically kicks off around Thanksgiving. Americans also cut back on spending at restaurants and bars, with sales falling 0.3%, the most in nearly a year. Spending at hobby, musical instrument and bookstores dropped 0.8%.
The dollar briefly dipped on the data against a basket of currencies before rebounding. GBP/USD has cleared 1.29 at the time of writing. the highest the pair has been all month.