Retail sales coming in at higher than expected; could lead to a promising holiday sales season

Overall retail sales were stronger than expected, increasing 0.6% in September. Total sales for the July through September 2010 period were up 5.7% from the same period a year ago.

Retail sales excluding autos increased 0.4% in September, also stronger than forecasts, and these thesesales for prior months were revised higher. Retail sales excluding autos, building materials and gasoline rose 0.4% in September (and August was upwardly revised to 1.0% from 0.6%).

This was a much stronger retail sales report than seen in recent months—especially with the marked upward revisions to the prior two months. Core retail sales (excluding autos, gasoline, and building materials) in the third quarter increased by 4.4% at an annual rate versus 1.8% in the second quarter, which points to stronger growth in real PCE than we had been projecting (2½% or so compared to around 2%). In the seasonally unadjusted real world, we are approaching the holiday season with rising momentum in retail sales growth and fears of consumer retrenchment appear to be overblown.

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US Census Bureau release

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