After reporting a sharp increase in U.S. retail sales in the previous month, the Commerce Department released a report on Tuesday showing retail sales rose by less than expected in the month of October.

The report said retail sales rose by 0.3 percent in October after jumping by a downwardly revised 1.6 percent in September.

Economists had expected retail sales to climb by 0.5 percent compared to the 1.9 percent spike originally reported for the previous month.

Excluding an increase in sales by motor vehicle and parts dealers, retail sales edged up by 0.2 percent in October after surging up by 1.2 percent in September. Ex-auto sales were expected to increase by 0.6 percent.

The weaker than expected retail sales growth was partly due to steep drops in sales by clothing and accessories stores, sporting goods, hobby, musical instrument and book stores and department stores.

On the other hand, the report said sales by non-stores retailers surged up by 3.1 percent and sales by electronic and appliances stores jumped by 1.2 percent.

Closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, inched up by 0.1 percent in October after climbing by 0.9 percent in September.

Gregory Daco, Chief U.S. Economist at Oxford Economics noted retail sales are 4.9 percent above their pre-Covid levels but called the near-term outlook "concerning."

"While phase one of the recovery proved that fiscally supported incomes can be potent drivers of spending on goods, we should not fall for alluring rearview mirror economics," Daco said.

He added, "Phase two of the recovery is significantly slower with muted employment gains and reduced fiscal aid weighing on incomes, and a worsening Covid outbreak once again limiting activity across the country."

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