Retail sales in the U.S. blew past economists' forecasts last month, reducing concerns that a housing-fueled consumer slowdown might drag the economy into recession.
The 0.6 percent increase was double the previous month, the Commerce Department said today in Washington, and three times the size predicted by analysts in a Bloomberg News survey. Separately, the Labor Department said core producer prices, which exclude food and energy, rose less than anticipated.
The retail report spurred investors to pare bets that the Federal Reserve will continue cutting interest rates to keep the economy growing.
"The pessimism that's been so widely spread about collateral damage from housing hasn't been realized," said Richard DeKaser, chief economist at National City Corp. in Cleveland, Ohio. "The downside risks so feared a month ago have diminished."
The lone bit of negative news was that the Reuters/University of Michigan preliminary index of consumer sentiment fell to 82.0 from 83.4 in September. The gauge compares with an average 89.6 in the first half of the year.
"It matters more what consumers do than what they say," said Kevin Flanagan, a Purchase, New York-based fixed-income strategist at Morgan Stanley's Global Wealth Management Group. "The decline in confidence is not spilling over into a significant retrenchment in spending."