The latest data goes from good, to OK, to bad. Most importantly, the consumer seems poised to give a solid boost to holiday sales and the overall economy. Retail sales gained a strong +0.8% m/m to a +4.6% y/y rate in October. However, the headline was driven by a +3.5% m/m surge in gasoline sales and a +1% m/m gain in auto sales.
After stripping out volatile components, core sales gained only +0.3% m/m but remained at a strong +4.5% y/y rate. Gains were widespread with a timely +1.3% m/m jump in department stores. Separately, industrial production was a bit more modest at +0.1% m/m, with the critical manufacturing component rising a stiffer +0.3% to +2.7% y/y. Thirteen of 19 sub-sectors are expanding, the most in over seven years.
Housing, however, may now be the weakest link in the economy, buffeted by rising mortgage rates, high prices, and low supply. The housing market index fell a sharp -8 points to 60, the lowest in over two years. The future sales component fell -10 points, the most in 31 years. Housing starts and permits both fell into negative y/y rates at -2.9% and -6%, respectively.