US retailers reported strong sales in October, a sign American consumers were spending with more gusto and could help keep the economy growing at a brisk pace.
Other data today showed consumer sentiment rising to a seven-year high this month, also positive for the spending outlook as the country nears its traditional period of frenzied holiday shopping.
Retail sales, which account for about one-third of consumer spending, rose 0.3% in October, the US Commerce Department said.
The gain was larger than analysts expected, and would have been higher but for a 1.5% drop in receipts at gasoline retailers.
"(The) numbers bode well for the crucial holiday shopping season," said Paul Diggle, an economist at Capital Economics in London. Americans turn their shopping into overdrive in late November ahead of December's Christmas holiday.
Sales rose broadly in October among retailers, from purveyors of clothing to sporting goods shops. Sales climbed 0.5% in a key reading that strips out volatile elements like gasoline, autos, building materials and food services.
The gains support the view that US consumers are ready to play a bigger role in supporting the recent acceleration in US economic growth.
Analysts expect the economy will expand about 3% next year, faster than the average growth rates clocked since the 2007-09 recession.
Other data showed the falling US unemployment rate and lower gasoline prices lifted a preliminary November reading of the Thomson Reuters/University of Michigan's consumer sentiment index to 89.4, the highest since July 2007 .
Separately, US Labor Department data showed import prices fell 1.3% in September, as cheaper oil and a strong dollar made it less expensive for Americans to buy goods from abroad.
While the US economy has accelerated in recent months, the global economy has appeared to slow, including in China, and the price of oil has weakened significantly. This is a boon for American shoppers.
"Consumers are spending what they are saving at the gas pump," said Camilla Sutton, a currency strategist at Scotiabank in Toronto.
The dollar has gained more than 10% against the currencies of US trading partners since June on expectations a stronger US economy will lead the Federal Reserve to raise interest rates, and today’s data led it to rise a little more against the yen and the euro.
