If it weren't for fewer car purchases and high gas prices, retail sales for October would have been strong, a new government report shows.
Analysts had predicted retail sales would fall 0.7 percent last month, but sales actually fell only 0.1 percent from the month before, Reuters reported. Car sales fell sharply by 3.6 percent in October, so if those figures were excluded, retail sales would have risen 0.9 percent. If gasoline were also excluded, the growth figure would be 1.1 percent, according to the Commerce Department report.
Sales at clothing and clothing accessories stores jumped 3.1 percent, which is the largest increase since October 2002, brightening the outlook for a brisk holiday sales season. Sales at department stores were up a solid 1.5 percent in October. Retailer Wal-Mart said it expects a good holiday season even though gas is still expensive, despite a 3.3 percent price drop at the pump last month.
Sherry Cooper of BMO Nesbitt Burns told Reuters that the report suggests "that the coming holiday season will be rosier than earlier expected."
The International Council of Shopping Centers said sales were up 3.9 percent for the week ending November 12 compared to last year, while Redbook Research reported that sales at major retailers were up 3.5 percent over the same period.
The Gulf Coast, hit hard by Hurricanes Katrina and Rita, accounts for only a small portion of national retail business, Commerce department officials said.
Meanwhile, U.S. producer prices rose in October, with prices received by farms, factories and refineries increasing by 0.7 percent last month, Reuters reported, citing a Labor Department report.
The report outlined weak underlying inflation, which could mean the Federal Reserve may reconsider future interest rate hikes.
"The report simply does not point to any immediate sharp rise in inflation," Joel Naroff of Naroff Economic Advisors told Reuters. "That has to make the Fed members feel good, though I doubt they will get wild and crazy and actually start considering stopping their rate hike program."