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November 15, 2019 Blog 1 min read
Retail sales rebounded in October after a weak September result….the most recent sign that the economy may be emerging from its soft patch.
11-15-19 Retail Sales ChartRetail sales rose by 0.3% in October, modestly exceeding expectations. Excluding vehicles and gasoline, sales increased by a slightly softer 0.2%. Over the past year, sales rose by 3.1%.

This bounce back in consumer spending is a welcome sign for the economy after sales slid by 0.3% in the previous month.

Strong automobile and gasoline sales led the way in October, while clothing and furniture sales dipped. Sales by nonstore retailers, which encompass the rapidly growing online retail channel, also grew by a solid 0.9%. Over the past year, the continued movement by consumers toward online commerce has driven 14.3% growth for that retail segment.

Consumer spending has been solid this year, buoyed by a strong labor market, low inflation, and decent wage gains. These positive catalysts, combined with strong growth in household wealth and manageable debt service costs, have supported a generally optimistic consumer sector despite a range of uncertainties.

Far and away, the consumer sector remains the engine of growth for the economy, and a big one at that. The virtuous cycle of solid labor market conditions and growing income supporting sentiment and driving spending remains very much intact.

Healthy demand is expected to continue through the end of the year as retailers forecast a strong holiday season. Current economic data and the recent stabilization or even improvement in a variety of indicators support this idea that families will open their pockets during the holidays. Standing in the way of this could be this year’s shortened post-Thanksgiving shopping season. With fewer shopping days after Thanksgiving, retailers may end up reporting softer sales beyond Black Friday, with some spending potentially being pulled forward. It could also be a boon for online retailers, which could benefit from its relative ease and flexibility for consumers.

Signs of stabilization in manufacturing, a modest pickup in the service sector, a rebound in retail sales, and a resiliently strong labor market appear to be setting up nicely for the year to end on an up note.
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Plante Moran Financial Advisors (PMFA) publishes this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult a representative from PMFA for investment advice regarding your own situation.