October retail sales better than first blush

December 16, 2025

October retail sales came in flat after being revised up to 0.1% for September. The outcome fell short of the consensus forecast for a 0.1% gain. Excluding autos, retail sales increased by 0.4% for the month, topping market expectations but consistent with estimates from credit card companies. Revisions were to the upside, which leaves us in stronger footing entering the quarter. 

Sales at motor vehicle and parts dealers plunged 1.6%; that was not a surprise, given the sharp drop in unit sales. Light vehicle sales fell sharply to a 15.3 million annualized pace in October from 16.3 million in September. That marked the weakest month in almost a year.  Tax credits for electric vehicles expired, too, hurting those models.

Other categories lost ground in October, including building materials, down almost 1.0%. Tariff-related price increases dulled demand while the home construction business remains in the doldrums. Consumers spent less time in restaurants and bars, driving down sales 0.4%, but we could see a rebound for November with Thanksgiving holiday spending. The government shutdown also dealt a blow to confidence about spending.

Sales increased across a broad range of categories. Furniture store sales jumped 2.3% as the onset of new tariffs on October 14 prompted vendors to offer discounts ahead of expected price increases; much of the existing inventory was discounted, though affluent buyers continued to support high-end shops. Gasoline station sales increased with prices at the pump falling more than 3%.

Big-box discounters did not fare as well as traditional department stores, which rang up 4.9% more sales. That was the largest monthly increase since February 2022. Spending at department stores may have benefitted from the proliferation of GLP-1 drugs, which are prompting consumers to buy smaller size clothing. Apparel, sporting equipment and healthy foods like fruits and vegetables are reshaping how consumers spend.

Electronics and appliance store sales increased 0.7%. New product launches in September and October usually buoy spending on consumer electronics; most smartphone makers secured tariff waivers.

The biggest winners were nonstore and miscellaneous retailers, which sell everything from online retail to florists and office supplies. Those numbers jumped nearly 10% from a year ago. The continued shift online showed up in the early results for Black Friday and Cyber Monday spending; we'll see that in the November and December official data.

Core retail sales, which feed into the calculation for consumer spending for GDP for the quarter, soared almost one percent, after slipping 0.1% in September. Core includes retail sales, minus spending on eating and drinking places, vehicles, gasoline and building materials stores.

Consumers continued to spend overall, despite the job losses and weakness due to the government shutdown. Preliminary data on November suggest that spending remained solid if not spectacular. The real test will be December, as the holiday shopping season has been compressed almost entirely into one month, much like we saw a year ago. Last year, spending soared in the final month of the year, along with holiday hiring. We expect similar but not as dramatic gains this year.