The Commerce Department reported today that retail sales increased by 1.4 percent in October. The increase in sales was driven in large part by a rebound in the automotive sector, which saw a big drop in September due to the expiration of the cash for clunkers program. The automotive sector saw a surge in sales of 7.4 percent. September's number was revised downwards, from a drop of 1.5 percent to a drop of 2.3 percent.
Excluding auto sales, retail sales climbed by 0.2 percent. Gains were seen in many sectors, led by food service and drinking establishment, non-store retail, and miscellaneous store sectors. Losses were led by the building materials and garden equipment, sporting goods, and furniture sectors.
The consensus estimate was for an increase of 0.9 percent, with projections ranging from a gain of 0.4 percent to 1.8 percent. Thus, the number was on the optimistic side of projections.
Analysts said that the October numbers showed that the consumer is showing some resilience in the face of high unemployment. With the labor market so w
eak, they said, October's retail sales numbers are about as good as can be expected.
One of the beneficiaries of the big increase in auto sales was General Motors. The company reported a loss of $1.15 billion. The company also showed positive net cash flow, reporting $3.3 billion in cash flow excluding items in its first report since emerging from bankruptcy in July. In the same quarter from last year, GM reported a loss of $2.5 billion and burned $6.9 billion in cash.
The improvement in results will allow GM to accelerate its repayment of government loans to the United States and Canada.
Much of the improvement was due to cost cuts. GM's structural costs dropped to $9.1 billion from $22 billion before the company filed for chapter 11. These cost cuts allowed the company to offset the drop in sales it saw, with global market share dropping from 13 percent in the same period last year to 11.9 percent.
GM still faces challenges. As the CEO of the company said, "with a healthier balance sheet and a competitive cost structure, our focus is on driving top line performance." Until that top line performance improves, GM will face challenges. But, it looks like the taxpayer's investment in the company will pay off.
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Excluding auto sales, retail sales climbed by 0.2 percent. Gains were seen in many sectors, led by food service and drinking establishment, non-store retail, and miscellaneous store sectors. Losses were led by the building materials and garden equipment, sporting goods, and furniture sectors.
The consensus estimate was for an increase of 0.9 percent, with projections ranging from a gain of 0.4 percent to 1.8 percent. Thus, the number was on the optimistic side of projections.
Analysts said that the October numbers showed that the consumer is showing some resilience in the face of high unemployment. With the labor market so w
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One of the beneficiaries of the big increase in auto sales was General Motors. The company reported a loss of $1.15 billion. The company also showed positive net cash flow, reporting $3.3 billion in cash flow excluding items in its first report since emerging from bankruptcy in July. In the same quarter from last year, GM reported a loss of $2.5 billion and burned $6.9 billion in cash.
The improvement in results will allow GM to accelerate its repayment of government loans to the United States and Canada.
Much of the improvement was due to cost cuts. GM's structural costs dropped to $9.1 billion from $22 billion before the company filed for chapter 11. These cost cuts allowed the company to offset the drop in sales it saw, with global market share dropping from 13 percent in the same period last year to 11.9 percent.
GM still faces challenges. As the CEO of the company said, "with a healthier balance sheet and a competitive cost structure, our focus is on driving top line performance." Until that top line performance improves, GM will face challenges. But, it looks like the taxpayer's investment in the company will pay off.
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