Retail sales rose broadly in October, suggesting the economy started the fourth quarter with some vigor, and the first drop in wholesale prices in four months pointed to subsiding inflation pressures.
Total retail sales increased 0.5 percent, the Commerce Department said on Tuesday, after rising 1.1 percent in September. That was above economists' expectations for a 0.3 percent rise.
In a separate report, the Labor Department said its producer price index fell 0.3 percent last month after rising 0.8 percent in September. Economists had expected the PPI to fall only 0.1 percent.
The data are uniformly positive, said Eric Green, chief U.S. economist at TD Securities in New York. Retail sales is more than enough to keep the economy going. They continue to push back the recession fears that began this summer.
The economy grew at a 2.5 percent annual pace in the third quarter, fueled in part by consumer spending.
U.S. stock index futures trimmed losses after the data, while government debt prices pared gains. The dollar held gains against the euro. In the 12 months to October, retail sales were up 7.2 percent. While October's retail sales report showed broad gains, weak income growth remains a constraint.
Consumer spending -- which accounts for more than two-thirds of U.S. economic activity -- rose at its fastest pace in nearly a year in the third quarter. But households are significantly cutting back on saving to fund their spending.
Wal-Mart Stores Inc. Chief Executive Mike Duke said the retail giant's U.S. customers were still worried about jobs and only one in 10 mothers taking part in its surveys view the economy as good.
With food prices rising faster than most wages, some shoppers were concerned about holiday meals, the company said.
Retail sales last month rose as receipts from motor vehicle dealers increased 0.4 percent, adding to the prior month's 4.2 percent gain.
Excluding autos, retail sales rose 0.6 percent, the largest increase in seven months, after advancing 0.5 percent in September.
Sales at food and beverage stores increased 1.1 percent, while receipts at sporting goods, hobby, book and music stores gained 1.3 percent. Sales of electronics and appliances soared 3.7 percent, while receipts from building material retailers increased 1.5 percent.
But clothing store sales fell 0.7 percent last month, the largest decline since December 2010, while furniture sales declined 0.7 percent.
Receipts at gasoline stations fell 0.4 percent last month after rising 0.7 percent. The decline reflects weak gasoline prices. According to the U.S. Energy Information Administration, gasoline prices fell 4.39 percent or 16 cents to $3.506 a gallon in October.
Excluding gasoline, retail sales rose 0.7 percent.
WHOLESALE PRICES FALL
Lower gasoline and consumer goods costs depressed prices received by farms, factories and refineries last month.
Excluding volatile food and energy, core wholesale prices were flat last month after climbing 0.2 percent in September.
Weak gasoline prices, combined with subsiding inflation pressures should ease the burden on stretched household budgets and support holiday shopping.
Core retail sales, which exclude autos, gasoline and building materials, rose 0.7 percent in October after advancing 0.5 percent the prior month.
Core sales correspond most closely with the consumer spending component of the government's gross domestic product report.
A gauge of manufacturing in New York state rose in November, ending five straight months of contraction, while the outlook for coming months strengthened, the New York Federal Reserve Bank said.
The New York Fed's Empire State general business conditions index rose to 0.61, up from minus 8.48 the month before. Economists polled by Reuters had expected a reading of minus 2.1.
(Reporting by Lucia Mutikani and Jason Lange; Editing by Neil Stempleman)