October retail sales in the United States grew more than expected and their annual growth recorded the highest pace since July 2024, suggesting that U.S. consumers showed continued resilience in their spending habits ahead of the presidential elections.

Retail and food services sales reached $718.9 billion in October, marking a 0.4% increase over September. The figure is seasonally adjusted but not adjusted for inflation and is an advance estimate released by a government agency Friday.

The monthly growth figure topped market expectations for a 0.3% increase, according to consensus estimates from TradingEconomics, but represented a deceleration from the upwardly revised 0.8% increase recorded in September.

Electronics Shopping Rebounds In October

On a year-over-year basis, retail sales grew by a robust 2.8%, the highest in three months and the second-strongest since April, up from the upwardly revised 2% in September.

Excluding motor vehicles and parts, retail sales rose by just 0.1% month-over-month, down from the upwardly revised 1% growth in September, missing expectations of 0.3%. When stripping out gasoline, motor vehicles, and parts, sales inched 0.1% up in October, a noticeable deceleration from the 1.2% growth seen the previous month.

Within spending categories, electronic and appliance stores recorded the largest monthly gain, with sales increasing 2.3%, rebounding significantly from the 2.9% decline in September.

Motor vehicle and parts dealers saw a 1.6% rise, accelerating from the previous 0.2% growth.

On the other hand, miscellaneous store retailers registered the steepest monthly decline, with sales contracting 1.6%, followed closely by furniture and home furniture stores, which saw sales fall 1.3%.

Before the report's release, traders were pricing in a 58% probability of a 25-basis-point rate cut at the Federal Reserve's December meeting, according to the CME FedWatch Tool.

Those expectations shifted substantially downward from about 80% after Fed Chair Jerome Powell stated on Thursday that the Federal Reserve is not in a hurry to lower interest rates.

Powell also emphasized that the strength of the U.S. economy allows policymakers to approach rate decisions carefully, suggesting the potential for a pause in rate cuts.

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