Retail sales in the United States fell slightly in October, according to government data published Wednesday, fueled by a large drop in consumer spending at furniture and home furnishing stores.
Sales in the world’s largest economy fell by 0.1 percent in October to $705 billion, down slightly from a revised increase of 0.9 percent a month earlier, the Commerce Department said in a statement.
This was slightly better than the median expectation of economists surveyed by MarketWatch.
The early spending data point to a slowdown in consumption in the fourth quarter, although the pace of spending remains “strong,” High Frequency Economics Chief US Economist Rubeela Farooqi wrote in a note to clients.
Despite the challenges from tighter credit conditions and monetary policy, and high prices due to inflation, “a still-strong labor market, a positive trend in incomes and an easing in price pressures should keep spending and growth positive for now,” she said.
Spending at furniture and home furnishing stores saw the largest monthly decline in October, falling by 2.0 percent from a month earlier.
Consumers also cut their purchases at auto dealers and at gas stations, which have seen a sharp decline in spending over the past year.
The US economy has remained resilient this year despite concerted efforts by the US Federal Reserve to tackle high inflation through interest rate hikes.
Economic growth in the third quarter was “boosted by a surge in consumer spending,” the Fed announced in its recent interest rate decision.
If retail sales continue to fall in the months ahead, that would act to slow down the US economy, lowering the pressure on the Fed to raise interest rates again to tackle inflation.
Also Wednesday, fresh data from the Labor Department showed that US wholesale prices fell in October by the most since April 2020, led by a sharp drop in final demand energy.
The producer price index (PPI) declined by 0.5 percent last month from September, when prices rose by a revised 0.4 percent.
This was below the median expectation of economists surveyed by MarketWatch.
“Producer price fell markedly in October due to a decline in goods prices,” Oxford Economics US Economist Matthew Martin wrote in a note to clients.
This was driven “by the retreat in energy prices after a surge in the prior two months, while services prices were unchanged,” he continued, adding: “The Fed will welcome the reprieve.”