U.S. retail sales beat analyst expectations in October, sparking some optimism about the U.S. recovery.

Sales were flat in October, up 0.7% excluding autos. This comes after a 1.3% drop in September, and is stronger than analysts expected. BMO Nesbitt Burns says, “The outlook took a decided turn for the better this morning on strong U.S. ex-auto retail spending data for October. While headline sales were flat, this represented a big drop in car sales that was already well known. The new information was in the “ex autos” segment of the report.”

Double-dip fears were eased considerably by the 0.7% gain in ex-auto retail spending, says Nesbitt. “Early indications point to further retailing gains in November. So, the U.S. is apparently sailing smoothly toward an acceptable Christmas season.”

Bank of Montreal comments, “The unexpected bounce in ex-auto sales was in part driven by a 1.5% gain in gas station sales, which likely reflects higher crude oil prices, rather than a significant gain in volumes. However, there was solid sales growth in clothing (4.0%), general merchandise (1.1%) and nonstore retailers (1.4%), which raises optimism that the US consumer remains resilient despite recent declines in confidence and employment. Still strong productivity growth and the rising value of housing assets are providing offsetting support.”

TD Bank observes that the weakness in sales at auto and furniture dealers, “provides some evidence that low interest rates are having a diminishing impact on U.S. consumer spending.” Still, it says, “With the Fed having taken out another 50 basis points of insurance earlier this month, and rates not likely to rise any time soon, the pullback in spending on durable goods is likely to prove limited. And, together with the continued modest increases we expect to see in spending on non-durables, that sets the stage for U.S. consumer spending to eke out a slim 1% gain in the fourth quarter.”

CIBC World Markets says that one month of data isn’t enough to draw definitive conclusions about consumer spending or real GDP. “Real goods consumption won’t look as favorable, since that report will use unit auto sales, which were down more sharply than nominal sales. Unless the auto sector stages a miracle in November-December, it will be difficult for consumer spending to contribute much to Q4 real GDP growth.”

RBC Financial Group economists also note that, in other U.S. consumer-related good news, initial unemployment claims for last week fell by a larger-than-expected 8,000 to 388,000 from an upwardly-revised 396,000 the week earlier. “Claims seem to be hovering just below the 400,000 and moving slowly lower, reflecting a weak labour market; a good sign, though, that things are not about to get worse,” it says.

And, U.S. import prices rose 0.1% in October, “below expectations and showing none of the upward influence expected from the dockworkers’ strike,” RBC says. “Export prices were flat in the month. The general trend in underlying import prices is up, another piece of evidence dismissing fears that deflation is taking hold.”