SALES at US retailers rose more than expected in October to post their largest gain in seven months, providing further evidence the economy was regaining strength after hitting a soft patch in the summer.
But yesterday’s upbeat report from the Commerce Department was tempered somewhat by news that a manufacturing gauge in New York state fell this month to its lowest level since April 2009.
The sturdy retail sale report offered hope for the holiday season and the broader economy, whose recovery from the worst recession since the 1930s had slowed in the summer.
Total retail sales increased 1.2 per cent, boosted by purchases of motor vehicles and building materials, after advancing by 0.7 per cent in September. The rise last month was almost double market expectations for a 0.7 per cent gain.
It was the fourth monthly increase in retail sales and was the latest in a series of data to suggest a pick-up in economic growth momentum.
Although the New York Federal Reserve’s “Empire State” general business conditions index fell to -11.1 in November from 15.7 in October, economists were little worried and pointed out that the survey was not a bellwether for the rest of the US economy.
Economists had expected the index to tick down to 14 this month. The survey’s forward-looking index of business conditions six months ahead was more upbeat, rising to 54.6 from 40 in October.
A loss of momentum in the US recovery prompted the Federal Reserve this month to launch a controversial $600bn (£374bn) round of bond buying, known as quantitative easing, to provide additional stimulus. Analysts said the US central bank could shift toward a smaller stimulus package if economic data continues to show underlying strength in the recovery.
A second report from the Commerce Department showed business inventories rose 0.9 per cent to $1.40 trillion, the highest level since March 2009, after increasing by a revised 0.9 per cent in August.
City A.M. Reporter