US shoppers spent up on building materials before winter sets in, according to the latest advance US October retail sales numbers. The US Commerce Department released retail sales figures showing a 0.1% increase for the month, less than the 0.3% expected but higher than the September figures which were revised down from 0.1% to 0%. The US 10 year Treasury yield fell 4bps on the day to 2.27% as markets were generally unimpressed by the result.
The October figures are the eighth non-negative month in a row and represent a 1.7% increase from October 2014 which is less than the 2.2% year on year result for September. “Core” retail sales, which excludes cars and petrol, rose 0.2% instead of the 0.4% expected but was up on the revised September figure of 0.1%.
In September, car sales drove the US retail sales figure but in October this segment went into reverse and it was the building materials category which offset the ongoing fall in “gasoline” sales, with home furnishings, restaurants and bars the next largest growth segments.
After the report’s release, AMP Capital’s Shane Oliver said the Fed was constrained by the combination of soft retail sales, weak producer price inflation although he did note US consumer sentiment was up. ANZ said even though the data was less than markets expected, “it was sufficiently strong to support the commencement of a gradual tightening cycle by the Fed in December.”
Consumer spending is estimated to account for about two-thirds of US GDP and the retail sales figures are used to provide an insight into consumer spending behaviour.
