WASHINGTON (AP) – Americans ramped up their online shopping and restaurant spending in October, but barely-there inflation kept overall retail sales growth muted.
The Commerce Department said Friday that retail sales rose a seasonally adjusted 0.1 percent last month, after being unchanged in September and August. Over the past 12 months, sales have risen 1.7 percent. Lower gasoline costs and meager inflation have downplayed the extent of consumer spending, as the retail sales report is not adjusted for price changes.
The U.S. economy has increasingly relied on consumers to propel growth. Consumer spending has been crucial for offsetting the drags caused by a global economic slowdown and cheaper oil prices and a stronger dollar hurting U.S. manufacturers. The October report suggests that some retailers had been expecting a busy holiday season, as one of the most critical drivers of retail sales growth – auto dealers – saw sales slip last month.
But retail earnings that arrived this week have been far from robust. Nordstrom cut its guidance for the year due to soft sales across all merchandise categories. That followed a warning from Macy’s on Wednesday, which said it was sitting on excessive inventories.
“What is worrying about the report is the combination of soft sales in September and October with retailer’s guidance that this holiday season will be on the slower side,” said Bricklin Dwyer, an analyst at the bank BNP Paribas.