retail sales
Holiday shoppers at the SoHo Apple Store in New York. Reuters/Brendan McDermid

On Friday, the U.S. Census Bureau is scheduled to release the retail sales data for the month of October. Most analysts expect a slight increase in the retail sales over the previous month, which, if true, would indicate an uptick in consumer spending and provide further impetus to calls for a rate hike before year end.

According to the Wall Street Journal and Bloomberg, October retail sales are expected to accelerate 0.3 percent over the previous month, when they rose by just 0.1 percent. Retail sales, excluding automobiles, are expected to rise 0.4 percent.

Meanwhile, analysts at the Bank of America Merrill Lynch struck a contrarian note and said that they expected a 0.3 percent month-on-month decline in October retail sales, caused primarily by warmer-than-expected winters.

“There has been a late start to the winter this year: the average temperature in October was 57.4 degrees Fahrenheit, which is the highest since 1963 and above the historical average of 54.3 degrees. Intuitively, this would depress sales of cold weather apparel, such as coats, hats, boots, etc,” Bank of America Merrill Lynch reportedly said, in a note to investors.

However, according to the Journal, a warm October is unlikely to significantly dent retail sales, as general-merchandise and clothing-store sales constitute only a small fraction of total retail sales.

All economic data to be released until December will be scrutinized by economists and investors looking for clues to a much-anticipated rate hike by the U.S. Federal Reserve. Positive trends in the U.S. labor markets over the recent weeks have seemingly trumped concerns aired by the more dovish analysts, who cite a prevailing low inflation as a reason to delay tightening monetary policy.

“It is quite possible that the conditions the Committee [the Federal Open Markets Committee] has established to begin to normalize monetary policy could soon be satisfied,” New York Fed President William Dudley said, during a speech Thursday.

Many now expect that even a weaker-than-expected retail sales data is unlikely to delay an imminent rate hike, as long as the number remains in the positive territory.