Retail sales rose +0.3% m/m in October, but on a y/y basis, sales growth eased from +4.1% to +3.1%. Gasoline sales rose a sharp +1.1% m/m and auto sales were up +0.5%. However other major categories fell significantly, and as a result, sales ex-gas and auto were up only +0.1% m/m. And after stripping out other volatile items, core sales, which are an input to GDP, gained only a modest +0.3% m/m, dropping the y/y rate from +5.1% just two months ago to +4.2%. Separately, industrial production suffered from the GM strike and fell a sharp -0.8% m/m to -1.1% y/y. The manufacturing component fell -0.5% m/m to -1.5% y/y, and even excluding the GM strike, manufacturing fell -0.1% m/m to -0.6% y/y. Fourteen of 19 manufacturing industries are down y/y. Clearly manufacturing remains in contraction. However the housing market is rebounding, as starts and permits both rose sharply in October, gaining +3.8% m/m and +5.0% m/m. The data is volatile but the three-month trend shows starts rising +6.1% y/y and permits rising +11.5% y/y. It was the highest level of permits in over 12 years. Finally a survey of homebuilders fell one point to 70 but is still clearly in expansion territory over 50.
