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Retail sales increased 0.5% in October from the previous month, according to the Commerce Department as reported on Reuters, after rising 1.1% in September. This fifth straight monthly gain was a 0.3% rise over what economists have predicted and indicates that the U.S. economy is showing signs of maintaining momentum going into the fourth quarter.
The economy’s tone was also enhanced by a report from the New York Federal Reserve Bank that showed factory activity in New York on the uptick for the first time since May.
October's rise in retail sales suggested consumer spending would support growth in the fourth quarter, though economists are concerned that spending is being funded from savings.
"Consumer spending is holding up better than many people had anticipated, given a 9% unemployment rate and modest wage gains," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, PA. "This pace of consumer spending is only sustainable if the labor market continues to heal."