Instant View: October retail sales rise 1.2 percent

NEW YORK (BestGrowthStock) – Sales at U.S. retailers rose more than expected in October to post their largest gain in seven months, boosted by purchases of motor vehicles and building materials, according to a government report on Monday that was further evidence the economy was regaining strength.

The Commerce Department said total retail sales increased 1.2 percent, the biggest rise since March, after advancing by an upwardly revised 0.7 percent in September.

The fourth monthly increase in retail sales was the latest in a series of data implying the economy’s recovery from worst recession since the 1930s was regaining momentum after hitting a soft patch in the summer.

Core retail sales, which exclude autos, gasoline and building materials, rose 0.2 percent after a 0.4 percent increase in September.

Core sales correspond most closely with the consumer spending component of the government’s gross domestic product report. Spending, which accounts for 70 percent of U.S. economic activity, increased at a 2.6 percent annual rate in the third quarter.

In other data, a gauge of manufacturing in New York State fell in November to its lowest since April 2009 after new orders and shipments tumbled, the New York Federal Reserve said in a report on Monday. The New York Fed’s “Empire State” general business conditions index fell to -11.1 in November from 15.7 in October.

ANALYSTS COMMENTS:

MICHAEL WOOLFOLK, SENIOR CURRENCY STRATEGIST, BNY MELLON, NEW YORK:

“Retail sales trump Empire State data any month. It’s a first order indicator with national implications and it reflects something very important to the recovery, which is consumer health. And retail sales was on fire in October after a better-than-expected month in September. The year-on-year figure is not too shabby, either. It’s a strong report and reflects that the economy is growing a bit faster than anticipated, perhaps in the 2.5 percent range. If the economy grows more quickly than expected, that could prompt the Fed to tilt toward a smaller QE package over the next year. If that happens, it would be positive for the dollar.”

STEVE GOLDMAN, MARKET STRATEGIST, WEEDEN & CO, BASED IN GREENWICH, CONNECTICUT:

“If you take out autos it (retail sales data) was roughly in line. The manufacturing was a bit weaker but it is not one of the better regionals like some of the other ones that are out there. It looks ugly on the surface but it is a regional one and some of the other data from manufacturing including last months was actually holding up pretty strong. Some of the other regional ones prior to that were not so strong but they were not harbingers of the national ISM survey.

TOM SCHRADER, MANAGING DIRECTOR, U.S. EQUITY TRADING, STIFEL NICOLAUS CAPITAL MARKETS, BALTIMORE:

“With the exception of Empire State, the numbers look a bit stronger. Retail sales ex autos look to be stronger. We’re a consumer-driven economy, and that’s certainly a good thing to see.

The (stock) market is selling off a little here. It might be looking at the Empire State numbers more. Do I think New York State is a bellwether for the rest of the economy? Not really. We really don’t have a lot for the rest of the day; business inventories shouldn’t be a huge market mover.

I think they’ll (market participants) probably forget about these numbers by the time of the opening.”

TIM GHRISKEY, CHIEF INVESTMENT OFFICER OF SOLARIS ASSET MANAGEMENT IN BEDFORD hILLS, NEW YORK:

“Retail sales were good. The top-line much better than expectations and a slight revision up to the prior period. The core, which means excluding auto, which certainly can be volatile in-line with expectations and a revision to the prior period. So we certainly like those numbers. The top line number, the total number is certainly one we would focus on more. It shows the likelihood is that the holiday period is going to be a good one for retail sales.”

“Empire State manufacturing is somewhat of an ugly number, but not what we would call a major number in terms of economic data. It is just New York state, so it’s a not a number that we put a lot of credence in. It does tend to be volatile, but it is a pretty ugly number so it did have an impact on the futures.”

TOM PORCELLI, U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK:

“The headline (in retail sales) is being driven by autos. When you strip out the non-key components what you see is that you actually had a very very mediocre report.

“I’m very surprised by the weakness in Empire, I’m going to call over and see what happened…It just doesn’t make a lot of sense.

“I think that the Empire number is suspicious enough where it probably won’t elicit a tremendous reaction but on the surface of it looks like something that should give the Treasury market a bid.”

Instant View: October retail sales rise 1.2 percent