U.S. Retail Sales (October 2025)

Retail sales flat, surprisingly strong core sales in October

• Retail sales were flat in October, held back by a 1.7% drop at dealer lots. The headline result was slightly weaker than consensus.
• Non-core sales categories were all down, with sales at gas stations (-0.8% m/m) and building and garden retailers (-0.9% m/m) also off.  
• The surprise came as the "control group", which excludes autos, gasoline and building supplies, rebounded in October (+0.8% m/m). Strength was seen at furniture (+2.3%), sporting goods (1.9%), non-store retailers (1.8%), miscellaneous store retailers (+1.5%) and clothing and accessories stores (-0.9%).
• Consumers clearly shifted their spending towards stuff, and away from bars and restaurants where sales fell (-0.4% m/m). This is the only service category in the report.

Key Implications

• October retail sales overall were a soft start to the fourth quarter. There were a few forces holding back headline retail sales in October, including the end of EV subsidies, lower gasoline prices and the impact of the government shutdown on government workers' spending. Today's number is consistent with our recent forecast for a soft quarter for consumer spending to end 2025.
• The better-than-expected momentum in core category spending increases our confidence that consumer spending is set to pick up in the first quarter of 2026. The government shutdown is likely to hold back spending in November too, but we should see a rebound in December that will set the first quarter up for a solid gain. The bigger concern is labor market softness which may weigh on the degree of the rebound in Q1.

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