Strong US Retail Sales Reinforce Dec. Rate Hike

US retail sales rose more than expected in October as households bought motor vehicles and a range of other goods, pointing to sustained economic strength that could allow the Federal Reserve to raise interest rates next month.

The Commerce Department said on Tuesday retail sales increased 0.8% last month, also boosted by demand for building materials likely as households cleaned up and made repairs in the wake of Hurricane Matthew, Reuters reported.

Adding to the report's bullish tone, September retail sales were revised up to show a 1% increase instead of the previously reported 0.6% rise. The combined September and October sales gain was the largest two-month rise since early 2014. Sales were up 4.3% from a year ago. Excluding automobiles, gasoline, building materials and food services, retail sales jumped 0.8% last month after an upwardly revised 0.3% gain in September.

These so-called core retail sales, which correspond most closely with the consumer spending component of gross domestic product, were previously reported to have risen 0.1% in September.