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Amazon Prime day gives lift to U.S. retail sales in October, but more pandemic pain awaits

A delivery worker for Amazon Prime bringing packages to customers. Online sales have soared during the pandemic.


chris delmas/Agence France-Presse/Getty Images

The numbers: Sales at U.S. retailers rose modestly in October with the help of a pandemic-delayed Amazon Prime Day, but the already-fading momentum is in danger of softening even further amid a record coronavus outbreak.

Retail sales rose 0.3% last month, the government said Tuesday, matching the forecast of economists polled by MarketWatch. Although it was the sixth advance in a row, it was also the smallest gain since the economy reopened in May.

If auto dealers and gasoline stations are excluded, sales climbed a lackluster 0.2% in October. Auto and gas receipts can swing sharply from month to month and distort underlying trends in the retail sales.

Read: U.S. jobless claims fall to pandemic low of 709,000

What happened: Sales rose the fastest among so-called nonstore retailers , mainly online purveyers led by Amazon
AMZN,
+0.07%
.
Receipts jumped 3.1%.

Amazon delayed its annual Prime Day to October from its usual spot in mid-July. Most rival retailers such as Walmart
WMT,
+1.26%

and Best Buy
BBY,
+3.80%

also held big sales around the same time.

Internet sales have soared during the pandemic. The virus accelerated a long-running shift toward online buying and away from on-premise shopping at brick-and-mortar locations.

Department stores, on the other hand, have been losing ground for years and the pandemic has caused some to go bankrupt. Sales sank 4.6% in October.

Sales also rose at auto dealers, gas stations, home centers and electronic stores.

Sales declined at grocers, bars, restaurants, pharmacies and stores that sell hobby items and home furnishings.

Read: Biden to talk more diplomatically toward China, but keep Trump’s big tariff ‘stick’

Big picture: Retail sales rebounded far faster than anyone would expected six months ago and now exceed prepandemic levels, but the return of cold weather and record increase in coronavirus cases poses another stiff test.

The viral surge has spurred a small but growing numbers of cities and states to reimpose restrictions on indoor dining and attendance at theaters and other entertainment venues, among other things. And colder weather limits the ability to serve customers outdoors.

Read: Trouble ahead: Coronavirus triggers more business restrictions

If the situation gets any worse, retailers are likely to face the bleakest holiday shopping season since the end of the Great Recession more than a decade ago.

Read: The cost of living — aka inflation — isn’t rising all that much

Market reaction: The Dow Jones Industrial Average
DJIA,
+1.59%

and S&P 500
SPX,
+1.16%

were set to open lower in Tuesday trades. Stocks rose on Monday after the Moderna
MRNA,
+9.57%

announcement that its pending vaccine is effective.


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