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Retail sales are a critical concern for American businessmen, investors and politicians as we enter the key holiday shopping season. So when October's data was reported recently, offering what seemed like a super result, the market cheered. However, by the end of that trading day, economists and strategists had conveyed deeper discoveries to their followings, and the major indexes closed lower then they opened. Wal-Mart shares (NYSE: WMT), perhaps the simplest and best barometer of retail, marked a chart that matched that of the broader market on the day.

October's Retail Sales increased 1.2%, significantly more than the economists surveyed by Bloomberg expected. The economists' consensus was set for a gain of just 0.7%. October's growth also represented a boost above September's revised rate of increase, at +0.7% (from 0.6%). That's super! Right?

Wrong… Excluding automobiles, which are a big ticket item and can skew the data, retail sales rose just 0.4%, matching expectations and easing from a 0.5% advance in September. The 0.4% month-to-month gain was actually the slowest in three months. While it is clear that a 5.0% gain in Motor Vehicle and Parts Dealers' sales skewed the numbers, another factor played a role as well.

Gasoline Station Sales, which are affected by shifts in gasoline prices and can have a big impact on the retail tally, increased 0.8% this month. This followed September's 1.2% contribution. If we look at Core Retail Sales, which exclude autos, gasoline and building materials, the increase drops to a significantly less impressive 0.2%.

Further, other contributors to the gain seem suspect and temporary. Building Materials & Garden Equipment and Supplies Dealers' sales increased 1.9%. Hailing from a contractor's family, it seems clear to me this is being driven by the weather proofing of homes for winter. There is a lot of window and door replacement that occurs at this time of year, as nest guardians prepare the property for the hard season.

Sporting Goods, Hobby, Book and Music Stores saw a 1.0% increase in October. We would not look to book stores on this, but perhaps the start of hockey, football, soccer and basketball season has folks buying new gear for junior around this time of year. September's gain marked 0.9% for this segment. Nonstore Retailers (web and catalog) marked a 0.8% gain last month, but this segment continues to benefit from market share gain, and cannot yet be utilized as a pure barometer for the economy.

I see trouble in the sales of Department Stores, found in the report within the General Merchandise Stores category. These icons of American consumption saw a 0.2% gain overall, likely aided by the discount shops within the general merchandise category. Department stores posted a 0.7% sales drop in October. The "trade down" play is definitely still hot, with General Merchandise up 2.0% year-to-year, but Department Stores down 2.2% during that same span.

Finally, electronics (and appliances), which is what everyone is supposedly buying these days, marked a 0.7% sales decline in October. If this barometer for American consumption shows red, then how healthy can retail really be?

Disclosure: No Positions