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October retail sales top estimates, September spending revised sharply higher

October retail sales grew from the prior month, reflecting continued resilience in the American consumer.

Retail sales rose 0.4% in October. Economists had expected a 0.3% spending, according to Bloomberg data. Meanwhile, retail sales in September were revised up to a 0.8% increase from a prior reading that showed a 0.4% increase in the month, according to Census Bureau data. Auto sales drove a majority of the gains in October's reading with sales in the sector rising 1.6%.

October sales, excluding auto and gas, rose just 0.1%, below consensus estimates for a 0.3% increase. The control group in Tuesday's release, which excludes several volatile categories and factors into the gross domestic product reading for the quarter, decreased by 0.1% in October, below estimates for 0.3% increase.

But both categories saw large revisions for September sales, though. Revisions showed sales in both groups increased 1.2% in September, up from a previous reading of 0.7% growth.

The report comes as investors continue to closely monitor the health of the US economy as the Federal Reserve's dials back its restrictive interest rate policy. To date, economic data has largely been better-than-expected, a welcome sign for investors as markets shift to accept the Federal Reserve may not slash interest as quickly as initially hoped.

In prepared remarks on Thursday, Federal Reserve Chair Jerome Powell said “the economy is not sending any signals that we need to be in a hurry to lower rates."

Powell added, "the strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”

Friday's data also wraps a busy week of economic news.

Earlier this week, two reports showed price increases made little progress toward the Fed's 2% inflation during the month of October. While the releases have raised debate over how much the Federal Reserve will cut interest rates in 2025, for now traders still see the Fed cutting rates once more to end 2024.

As of Friday morning, markets were pricing in a nearly 60% chance the Federal Reserve cuts interest rates by 25 basis points at its next meeting on Dec. 18, per the CME FedWatch Tool.