Retail sales managed to grow more than expected in the month of October, rising 0.8% on the headline number. Bloomberg and Dow Jones (Wall Street Journal) both had their consensus estimate at 0.6% for October. Another boost seen was that September’s gain was revised higher to 1.0% from the 0.6% initial estimate. If you want to know just how large that number is, it represents retail sales of $465.9 billion in October, on a seasonally adjusted basis.

There has been a belief that many of the economic reports will not matter to investors right now. What stands out here is that the headline report, even if you consider that the individual components may not be universally strong, is that this means consumer spending was already strengthening ahead of the election and at the start of the fourth quarter. And consumer spending accounts for about two-thirds of gross domestic product (GDP).

If you look at retail sales excluding autos, this also rose by 0.8% in October. Bloomberg was calling for just 0.5%. Then there was the retail sales excluding autos and gasoline rising by 0.6%, rather than the 0.3% projected by the Bloomberg consensus estimate.

All in all, there were solid gains across the board. The auto sales, which have been mixed of late, were up 1.1% in October after having been up 1.9% in September.

Building materials (and garden equipment) rose 1.1% in October, after rising 1.8%. Non-store retailers, which is the likes of Amazon and e-commerce, rose by 1.5%. The price impact for gasoline helped to boost the data from a year ago.

All in all, the net effect of this retail sales report is that it could support higher estimates for the fourth-quarter GDP. It may even raise expectations for the revision of third-quarter GDP.

Stifel Fixed Income Chief Economist Lindsey Piegza said of Tuesday’s report:

This morning’s retail sales report was stronger than expected with gains in 11 of 13 categories. Furthermore, with the largest back-to-back months of increased sales in nearly two years, the October sales report suggests positive momentum in consumer activity as we look out to the final weeks of the year. Ignoring moderate job gains and declining income growth, consumers were willing to loosen their purse strings and hit the malls last month extending purchases of everything from clothing to electronics to building materials. Perhaps the uncertainty of the presidential election wasn’t such a dark cloud hanging over the American people?

Perhaps optimism for a new administration sobered Americans to take advantage of deep discounts and financing opportunities as increased future growth would certainly result in higher costs and interest rates? Perhaps an unseasonably warm start to the winter kept shoppers out and about or simply pent up demand from more subdued spending habits in Q3 prompted a temporary buying of goods?  Reasoning aside, this morning’s report suggests welcome improvement (momentum?) at the start of the final quarter of the year, further supporting expectations for 2.3% growth, according to the median consensus on Bloomberg. Still at 2.3%, assuming no revisions to the previous three quarters, 2016 growth would be an unimpressive 1.9%.

The advance estimates are based on a subsample of the Census Bureau’s retail and food services sample of approximately 4,700 retail and food services with their sales weighted and benchmarked to represent over three million retail and food services firms.

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