U.S. retail sales blew away analyst expectations in October. U.S. retail sales soared 7.1% during the month, led by the auto sector, which jumped by 26% thanks to the zero%-financing incentive programs.

Ex-auto spending rose more than expected, too, rising 1%, with gains in drug sales, clothing, and building materials. On a year-over-year basis, retail sales were up 7.5%, up 1.6% over that period ex-autos.

BMO Nesbitt Burns says that the impact on fourth quarter GDP may be relatively small as most of the auto deals were used to clear out inventories. Moreover, imports are likely to spike in the month.

CIBC World Markets says that the result, “nearly guarantees some support from consumers for final quarter GDP growth. If, for example, November-December auto sales revert to their earlier pace, and ex-auto activity is essentially flat in real terms over the last two months, real consumer spending would still be on pace for at least a 2.5% gain in Q4. That’s more than a full percentage point above our last forecast assumption.”

CIBC World Markets says, “What now bears watching is November data, which will tell whether this was merely a one-time rebound from a deep hole, or the start of a new uptrend.”

BMO concludes, “Although retail sales were much better than anticipated in October, there are a two things that should temper the enthusiasm over this report: Detroit will not give away cars forever; and, the deterioration in employment suggests that the sales momentum will not be maintained into the Christmas season.”