In this Nov. 6, 2019, photo, people shop at Books & Books, a locally owned business, in the Coconut Grove neighborhood in Miami. On Friday, Nov. 15, the Commerce Department releases U.S. retail sales data for October. (AP Photo/Lynne Sladky)

US retail sales rose a modest 0.3% in October

November 15, 2019 - 7:55 am

WASHINGTON (AP) — Americans stepped up their shopping last month, spending more online and buying more cars, evidence that consumers can still drive the economy’s growth.

The Commerce Department said Friday that retail sales rose 0.3% in October, rebounding from a 0.3% drop the previous month. Sales increased 3.1% compared with a year ago.

The figures suggest higher tariffs on many consumer products imported from China, imposed in early September, as well as broader trade uncertainty, did not hold Americans back from spending. Consumers remain mostly optimistic and willing to make large purchases, such as autos, even as businesses cut back on investment and exports stall.

The figures suggest spending during the upcoming Christmas holiday could be solid. The unemployment rate is near a 50-year low and wages are rising, encouraging more shopping.

E-commerce is still gaining steam. Sales in a category that mostly includes online and catalog shopping jumped 0.9% in October and 14.3% from a year earlier.

Sales at auto dealers also rose, increasing 0.5%. Gas stations reported a 1.1% jump in sales, which mostly reflected higher prices. Grocery stores and general merchandise retailers, which includes stores such as Walmart and Target, also said that sales increased.

Walmart reported a strong sales increase in its third quarter Thursday, boosted by a huge 41% increase in online sales.

Spending at restaurants and bars fell 0.3%, the biggest drop in almost a year. Still, those sales are 4.7% higher than a year ago.

Plenty of retailers are struggling, however. Clothing stores reported a sharp 1% drop in sales, and furniture and electronics and appliances stores also reported declines.

The economy has slowed since earlier this year, with growth clocking in at just 1.9% in the July-September quarter, down from 3.1% in the first three months of the year. Most analysts partly blame the weakening on uncertainty surrounding the U.S.-China trade war, which has caused many companies to delay plans to invest and expand. That’s left consumers as the principal drivers of growth.

So far, Americans have maintained their spending, quelling fears of a recession, which flared as recently as two months ago when trade tensions worsened.

Federal Reserve Chairman Jerome Powell said Thursday that the U.S. economy is a “star performer” and expressed confidence that it would keep expanding at a moderate pace, with few signs of bubbles or other weaknesses appearing.

Signs that the U.S. and China may soon reach the first stage of a trade deal has also helped soothe financial markets, pushing up stock prices and bond yields.

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