LIVE MARKETS-Retail sales on track for October

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RETAIL SALES ON TRACK FOR OCTOBER

Household credit card spending indicates retail sales have gotten back on track for October, according to Bank of America U.S. economists Aditya Bhave and Shruti Mishra.

Total card spending per household, as measured by Bank of America total credit and debit cards, was up 2.4% year-over-year in October and up 0.3% on a month-over-month basis, they wrote in a note to clients. Gains for the month were led by electronics, department stores, online retail and furniture while gas, home improvement and groceries declined.

BofA is forecasting a 0.2% month-over-month rise in retail sales excluding autos for October, just below the 0.3% estimate of economists polled by Reuters. However, "given that gas spending growth was particularly weak in the BAC card data, we forecast a stronger 0.5% print on the control group," which is stronger than the current 0.3% estimate.

The economists note that they are in the "unusual position" of attempting to forecast the October data without having the September data yet due to the delay caused by the government shutdown. Since they are below consensus estimates for September, if there is "a big surprise in the September print or a large revision to the October SF projections, we would consider revising our October retail sales forecasts."

The firm also notes the gap in total card spending growth between higher- and lower-income households has been somewhat steady and substantial over the last quarter, with the gap being greater in certain discretionary categories such as airlines, furniture, lodging and cruises, which "is consistent with the K-shaped nature of spending that many consumer companies highlighted in 3Q earnings."

(Chuck Mikolajczak)

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