Retail sales increase 0.5% in October
Retail sales rose more than expected in October as Americans snapped up new Apple iPhones and demand for automobiles improved, giving the U.S. economy a boost entering the final quarter of 2011.
The 0.5% gain in October from the previous month followed a 1.1% increase for September, Commerce Department figures showed Tuesday. Economists expected a rise of 0.3% in a Bloomberg survey. Purchases of electronics jumped the most in two years.
Consumer spending, the biggest part of the economy, needs to keep growing to bolster the expansion as the European credit crisis threatens to slow sales overseas. Nonetheless, retailers like Macy’s Inc. and Kohl’s Corp. plan to use discounts to lure shoppers during the holiday season as unemployment hovers around 9% and wage gains fail to keep up with inflation.
“The rise in retail sales suggests a very strong start to the quarter,” said Millan Mulraine, a senior U.S. strategist at TD Securities in New York. “Consumers are finding some reassurance in the fact that the economy isn’t going into a recession and the labor market isn’t going belly up.”
Other reports showed that wholesale prices dropped in October and manufacturing in the New York region expanded in November for the first time in six months.
The producer price index declined a more-than-projected 0.3%, the first decrease in four months, as the cost of energy and automobiles decreased, according to the Labor Department. Economists had forecast a 0.1% decrease, according to the Bloomberg survey. The so-called core measure, which excludes volatile food and energy, was unchanged, marking the first time without an increase since November 2010.
The Federal Reserve Bank of New York’s general economic index rose to 0.6, the first positive reading since May, from minus 8.5 in October. Economists had projected that the gauge would rise to minus 2. Readings higher than zero signal that companies in the Empire State index, which covers New York, northern New Jersey and southern Connecticut, are expanding.
