|Month over Month||0.3%||-0.3%||-0.1%|
|Year over Year||1.8%||1.5%|
Retail sales were unexpectedly poor in October. A 0.3 percent monthly decline followed an unrevised 0.1 percent decrease in September and although annual unadjusted growth climbed from 1.5 percent to 1.8 percent, this was simply due to favourable calendar effects. To make matters worse, volume sales were down an even steeper monthly 0.6 percent.
The headline drop was at least largely due to weakness in the food sector where nominal purchases were off 0.8 percent from the end of the third quarter. Non-food demand dipped just 0.1 percent although this still compounded a 0.2 percent decrease last time.
Over the last three months total volume sales were only flat and in October alone, stood 0.6 percent below their third quarter average. October's weakness flies in the face of a steadily rising trend in consumer confidence the Istat measure has gained ground every month since July - and it may well be that November will see a decent bounce. However, for now it looks as if household spending has got off to a poor start this quarter which, as the key driver behind economic growth in July-September, does not bode well for current period real GDP.
Retail sales measure the total receipts at stores that sell durable and nondurable goods. The monthly change in the headline figure, which is reported in volume terms, is only disaggregated into food and non-food categories.
With consumer spending a large part of the economy, market players continually monitor spending patterns. Retail sales are a measure of consumer well-being. The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.
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