Retail Sales Skyrocket
November 14, 2001
Retail sales were much better than expected in October.
The U.S. Commerce Department reported on Wednesday a 7.1% increase, the biggest one month gain in 10 years.
Much of the spike reflected increased sales of cars due to low financing offers, which caused sales to increase more than 26% during the month. Excluding that sector, retail sales still increased 1% for the month after sales fell a revised 2.2% the month before.
According to Newport Communications Senior Economist Jim Haughey, although the surprise was almost entirely in motor vehicles, the income generated in that industry will spread quickly to the rest of the economy.
“When you compare the numbers from the previous two months, this means that sales fell only 0.5%. Consumers are more optimistic than we thought. October sales took a big bite out of surplus inventory, so production will turn up sooner than most expected, which is welcome news for trucking.”
Haughey notes we will still have rising unemployment, saying, “Jobs are a lagging indicator and can decline for as long as a year after an economic rebound begins.”
Durable goods remained the weakest sector for retail sales. The October change was down 0.5% for furniture compared to a more than 4% decline in September. Sales at building materials dealers rose 2.8%, offsetting a 2.6% drop in September. Clothing and accessory sales soared 6.9% following a 5.9% falloff the previous month.