WASHINGTON (MarketWatch) — Sales at U.S. retailers rose in October, snapping back from the first decline in eight months, as plunging gasoline prices gave consumers more money to spend on other goods and services.
The uptick in spending last month, especially when gasoline is stripped out, suggests households could be prepared to spend more during the holiday season than they have in years. That would be a boon for the economy because retail sales account for one-third of consumer spending, the main engine of U.S. economic activity.
Retail sales rose by a seasonally adjusted 0.3% last month , the Commerce Department said Friday. Economists polled by MarketWatch had forecast a 0.2% gain after an unrevised 0.3% decline in September that marked the first drop in eight months.
Sales minus gasoline rose an even stronger 0.5%. Most retailers posted improved sales, led by online sellers, sporting-goods stores, pharmacies and clothing outlets.
“Consumers started spending some of the money saved at the pumps in other areas,” said economist Andrew Grantham of CIBC World Markets.
Consumers also spent more at bars and restaurants for the sixth month in a row, a positive trend that indicates Americans are growing more confident. People eat out more when the economy is healthier.