U.S. Retail Sales Climb More Than Expected Amid Jump In Gas Prices

Retail sales in the U.S. increased by more than anticipated in the month of October, the Commerce Department revealed in a report released on Thursday.

The Commerce Department said retail sales advanced by 0.8 percent in October following a revised 0.1 percent dip in September.

Economists had expected retail sales to climb by 0.5 percent compared to the 0.1 percent uptick originally reported for the previous month.

The bigger than expected increase in retail sales was partly due to a spike in sales by motor vehicle and parts dealers, which surged up by 1.1 percent in October after dipping by 0.1 percent in September.

Excluding the jump in auto sales, however, retail sales still rose by 0.7 percent in October after edging down by 0.1 percent in September. Ex-auto sales had been expected to increase by 0.5 percent.

Sales by gas stations showed a substantial increase amid higher gasoline prices, soaring by 3.5 percent in October after falling by 0.4 percent in September.

The report also showed notable increases in sales by department stores, building materials and supplies dealers, and electronics and appliance stores.

Meanwhile, closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, rose by 0.3 percent in October, matching the downwardly revise increase in September.

"The plunge in oil prices in recent weeks will boost households' real disposable incomes by close to $40 billion, with surging natural gas prices likely to offset only a small fraction of that improvement in purchasing power," said Michael Pearce, Senior U.S. Economist at Capital Economics.

"With consumer confidence still high, much of this extra cash is likely to filter through to spending on other goods and services," he added. "But we doubt that will be enough to replace the boost from the earlier fiscal stimulus or offset all of the headwind from tighter monetary policy."

Compared to the same month a year ago, retail sales were up by 4.6 percent in October versus the 4.2 percent year-over-year increase in September.

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