U.S. retail sales climbed 1.3% in October after stalling a month earlier, as consumer demand for goods stayed healthy despite high inflation. The better-than-expected gain marks the fastest pace in eight months.

Purchases at motor vehicle and parts dealers rose 1.3% amid easing supply chain snags and gas station receipts jumped for the first time in four months, up 4.1% on higher prices. Excluding autos and gas, sales were up 0.9%, with broad-based gains suggesting consumers remain resilient despite risks of a looming recession. Sales for building materials jumped 1.1% in the face of higher borrowing costs, while furniture purchases also gained 1.1%. Restaurant receipts rose, though largely due to higher services costs.

Importantly, the control measure (ex-food services, autos, gas, and building materials) climbed by a solid 0.7% after an upwardly revised 0.6% gain. This figure feeds directly into GDP estimates and flags a healthy start for Q4 household consumption.

Compared to a year ago, sales climbed 8.3% as a robust job market continues to support consumers, though much of the increase reflected higher prices (CPI +7.7%).

Bottom Line: Consumers—the biggest engine of the U.S. economy—are still holding up. Strong job and wage growth are shoring up households, despite still-high inflation, tightening financial conditions, and a weaker economy.

Table 1 - United States — Retail Sales

(month/month % change)

Source: BMO Economics, Haver Analytics

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