WASHINGTON — October retail sales inched up as consumers indulged in some discretionary purchases — helping to push stocks in the sector up 1.1 percent — but Federal Reserve chairman Ben Bernanke warned economic growth would be “moderate” next year as credit conditions and the weak job market restrain the recovery.
Sales at department stores increased 0.3 percent in October from the previous month, but declined 2.9 percent to $15.6 billion in year-to-year comparisons, the Commerce Department said Monday. Specialty store sales increased 0.4 percent compared with September and rose 1.5 percent to $17.65 billion compared with the same period a year earlier.
“Though the October numbers show some signs of optimism for retailers, the industry is still not out of the woods,” said Rosalind Wells, chief economist with the National Retail Federation. “While categories like apparel, sporting goods, books, music and personal care fared well, housing-related categories such as furniture and home improvement continued to struggle.”
Spending on discretionary purchases such as apparel is gradually increasing as the economy bottoms out, said Bob Duffy, senior managing director and leader of the retail practice for FTI Consulting.
But he cautioned: “From a retailer perspective, there’s not a significant movement that’s going to let any of us sit back and say happy days are here again.”
John Lonski, chief economist for Moody’s Investors Service, said increases in restaurant sales also indicated that “discretionary consumer spending may be making a comeback.”
Overall, October retail and food service sales increased 1.4 percent month to month, but fell 1.7 percent to $347.5 billion compared with a year earlier. The October increase was driven primarily by auto sales, economists said.
“The October retail sales numbers were a very mixed bag, but signal that, despite the consumer’s gloomy mood, spending is improving,” said Nigel Gault, chief U.S. economist with IHS Global Insight.
The mass merchant’s Retail Industry Leaders Association pointed out that clothing sales increased for the fourth month in a row, which it called an encouraging sign.
“As the important holiday shopping season approaches, steady sales are a welcome sign that consumer angst continues to ease,” said Casey Chroust, executive vice president for retail operations at RILA.
On Monday, the S&P Retail Index advanced 4.46 points to 409.87 as the Dow Jones Industrial Average rose 1.3 percent, or 136.49 points, to 10,409.96.
In a speech at the Economic Club of New York, Bernanke said economic growth would be “moderate” next year.
“The flow of credit remains constrained, economic activity weak and unemployment much too high,” he said. “Future setbacks are possible.”
Bernanke noted the U.S. has lost about 8 million jobs since December 2007, and employers are able to keep all the workers they need with minimal wage increases or even wage cuts.
“Jobs are likely to remain scarce for some time, keeping households cautious about spending,” he said. “As the recovery becomes established, however, payrolls should begin to grow again, at a pace that increases over time.”