U.S Retail Sales Inclined 0.8% In October

Retail sales rose more than expected in October, according to a Department of Commerce report today.

Sales at U.S. retailers rose more than forecast last month in a broad advance after an even stronger September than initially estimated, showing consumers continue to pump up the economy.

A 0.8 percent rise in October followed an upwardly revised .1 percent jump in the prior month, marking the biggest back-to-back increase since March-April 2014, the Commerce Department reported today. The median forecast in a Bloomberg survey called for a 0.6 percent gain. Over the last 12 months, retail sales were up the most in almost two years.

This increase was led by higher spending on gas and at online retailers like Amazon.

Furniture stores, brick-and-mortar department stores, restaurants, and bars were the only places where declines from September were recorded.

"The solid 0.8% m/m increase in retail sales in October brings to an abrupt end the run of weaker underlying sales gains over the past few months and, further, suggests that households were not unduly concerned by the presidential election," Paul Ashworth, chief US economist at Capital Economics, said in a research report sent to clients.

The holiday shopping season is the most crucial part of the year for many retailers' profit margins, and some companies, including Macy's Inc. and Kohl's Corp., have reported improving sales trends and optimism for the holidays.

Some economists said the outlook of rising consumer spending, a steady labor market and building inflation will nudge the Federal Reserve closer to raising interest rates. Fed policy makers are set to convene once more this year –(Dec. 13-14) -- and have indicated they are inclined to raise rates at that point if signs suggest a steadily improving economy.

Consumer spending makes up about 70% of economic activity, and the Federal Reserve is expected to scrutinize today’s report as it weighs an anticipated interest rate hike at a meeting next month. The Fed has held its key rate steady’s lifting it in December for the first time in nine years.

Gross domestic product, the broadest measure of goods and services produced in the U.S., expanded at a 2.9% annual rate in the third quarter after growing at slightly above a 1% pace in the first half of the year. The latest spurt in consumer spending could signal new momentum heading into 2017.

Many economists expect growth of around 2% in the final months of the year.

The US economy created 161,000 jobs last month, and the same data release showed the number of jobs created for the months of August and September was revised up.