October retail sales up 0.4%, beating forecasts

Paul Davidson | USA TODAY

Consumers opened their pocketbooks last month despite the federal government shutdown.

Retail sales rose 0.4% in October, soundly beating economists' expectations. Also, sales for September were sharply revised upward, from a decline of 0.1% to an increase of 0.5%.

Action Economics survey of 27 economists forecast 0.1% growth in retail sales last month.

Excluding autos, retail sales rose 0.2% last month. Economists had expected no change.

The 16-day government shutdown and budget standoff in Congress dampened consumer confidence and generated uncertainty about the economy's prospects. But the showdown apparently had less impact on consumers' shopping than anticipated.

Last month's strong performance was driven by furniture and electronic stores, clothing retailers and sporting goods shops. Sales at home improvement stores fell.

The better-than-expected gains could bode well for holiday sales. Most economists had expected sales this season to rise less sharply than last year.

Consumers who are shopping are enjoying low inflation. Consumer prices dipped 0.1% last month on falling gasoline prices, the Bureau of Labor Statistics said. Over the past year, inflation is up just 1%.

Economists have been expecting Americans to increase their purchases because they have worked off much of the debt they built up during housing and credit bubble in the mid-2000s. Also, the effects of this year's federal spending cuts and tax increases are diminishing.