Retail sales rise faster-than-expected

WASHINGTON (Reuters) - Sales at U.S. retailers rose more than expected in October as consumers bought more motor vehicles and other goods, but the previous month's figures were revised sharply downward, a government report showed on Monday.

In a report that pointed to gradual improvement in spending, the Commerce Department said total retail sales increased 1.4 percent last month, the largest advance since August, after dropping by a revised 2.3 percent in September. Sales in September were previously reported to have declined by 1.5 percent.

Analysts polled by Reuters had forecast headline retail sales rising 1.0 percent last month. Sales in October were boosted by a jump in new vehicle and parts sales, which surged 7.4 percent.

Auto sales had slumped 14.3 percent the previous month following the expiration of the government's popular "cash-for-clunkers" incentive program in August that had buoyed demand for motor vehicles. Previously, the government had reported auto sales falling 10.4 percent in September.

With government stimulus behind the bulk of the economy's 3.5 percent annualized growth pace in the third quarter, there are fears that rising unemployment will continue to weigh on consumer spending and hold back the recovery.

Excluding motor vehicles and parts, retail sale rose by a smaller-than-expected 0.2 percent in October after increasing 0.4 percent in September, and advancing for a third straight month. Economists had expected a 0.4 percent increase.

Gasoline station sales were flat in October after rising 0.9 percent in September. Core retail sales excluding autos, gasoline and building materials rose 0.5 percent, advancing for a fourth straight month.

Sales of building materials dropped 2.4 percent last month after falling 0.6 percent in September.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)