WASHINGTON: US retail sales increased less than expected in October and could slow further, restrained by spiraling new Covid-19 infections and declining household income as millions of unemployed Americans lose government financial support.
While other data on Tuesday showed production at factories accelerating last month, output remained well below its pre-pandemic level and the uncontrolled coronavirus outbreak could disrupt production. The public health crisis and frail economy are major challenges confronting President-elect Joe Biden when he takes over from President Donald Trump in January.
Retail sales rose 0.3% last month, the smallest gain since the recovery started in May, after increasing 1.6% in September, the Commerce Department said. They account for the goods component of consumer spending, with services such as healthcare and hotel accommodation making up the other portion.
Sales were supported by Amazon.com’s “Prime Day” event, with online receipts surging 3.1%. “Prime Day” is normally in July and some economists said this could have thrown off the model that the government uses to strip seasonal fluctuations from the data, leading to the modest sales gain.
Economists polled by Reuters had forecast retail sales would gain 0.5% in October. Retail sales rose 5.7% on a year-on-year basis in October and are above their February level, with the pandemic shifting demand away from services to goods.
Excluding automobiles, gasoline, building materials and food services, retail sales gained 0.1% after a downwardly revised 0.9% increase in September. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously estimated to have risen 1.4% in September.
A separate report from the Fed on Tuesday showed manufacturing output increased 1.0% last month after rising 0.1% in September. Production remains about 5% below its pre-pandemic level. Output was boosted by production of aerospace and miscellaneous transportation equipment, offsetting decreases in furniture, fabricated metal products, motor vehicles and parts. Growth estimates for the fourth quarter are below a 5% annualized rate. The economy grew at a 33.1% rate in the July-September quarter after contracting at a 31.4% pace in the second quarter, the deepest since the government started keeping records in 1947.—Reuters
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