WASHINGTON (Reuters) – U.S. retail sales rose slightly more than expected in October, but the underlying momentum in consumer spending appears to be slowing at the start of the fourth quarter, data released by the Department of Commerce on Friday showed. Trade.

These sales increased last month by 0.4%, monthly, after an increase of 0.8% in September (revised figure of +0.4%).

Economists polled by Reuters on average forecast growth of just 0.3% in October. Estimates ranged from stagnation to an increase of 0.6%. The strength of consumer spending allowed the American economy to maintain a sustained pace of growth during the third quarter.

Consumption is largely driven by the strength of the labor market, solid household cash flow against a backdrop of rising stock markets and high property prices. Household savings also remain important.

QUESTIONS ABOUT CONSUMPTION

Some experts, however, fear that growth will be mainly driven by middle- and upper-income households, who benefit from greater flexibility and greater substitutability in terms of consumption.

Bank of America card data, however, shows spending resilience across all income segments of the population.

“We don’t see any signs of increased use of credit cards in any income bracket,” notes Aditya Bhave, economist at Bank of America Securities.

“However, we observe that higher-income households appear to outperform in certain service sectors such as airlines, accommodation, leisure and cruises,” adds the economist.

Excluding automobiles, fuels, construction materials and food services, sales fell 0.1%, compared to a gain of 1.2% in September. The consensus was for an increase of 0.3%.

This category, which is closest to the component of household consumption expenditure used in the calculation of gross domestic product (GDP), increased by 0.7% in September.

Consumer spending grew at an annualized rate of 3.7% in the third quarter, helping to push gross domestic product (GDP) growth over the same period to 2.8%.

The US Federal Reserve (Fed) last week cut its benchmark overnight interest rate by 25 basis points, to between 4.50% and 4.75%.

Although the U.S. central bank is widely expected to make a third rate cut in December, some economists say its next move will be tight. They cite lack of progress in reducing inflation toward the 2% target.

Fed Chairman Jerome Powell said Thursday that “the economy is not sending any signals that we need to rush to lower rates.”

The U.S. central bank began its monetary easing cycle with a half-percentage-point rate cut in September, its first reduction in borrowing costs since 2020.

It had carried out a regular increase in its rates between 2022 and 2023, with a total increase of 525 points, in order to bring down inflation.

On Wall Street, futures contracts on the main indices suggest an opening Friday down 0.37% for the Dow Jones, 0.57% for the Standard & Poor’s 500 and 0.97% for the Nasdaq.

On the bond market, the yield on two-year US Treasury bonds rises around five basis points, to 4.354%, and that of ten years 3.5 points, to 4.4532%.

The dollar fell 0.28% against a basket of reference currencies, but remained above 106 points, a high level supported by expectations of less significant rate cuts from the Fed.

(Reporting by Lucia Mutikani, Claude Chendjou, edited by Blandine Hénault)

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