Analysts and investors will watch closely for signs of a slowdown in consumer spending, which accounts for about two-thirds of gross domestic product in the United States.
Many retailers have already warned of consumers pulling back as they grapple with higher energy and food costs and higher mortgages, raising concerns about the strength of this year's holiday shopping season, which often accounts for more than a quarter of annual sales for many retailers.
Brean Murray Carret analyst Eric Beder, whose sentiments are typical of many Wall Street analysts, said he believes October was "another lackluster month for retailers, driven by poor weather, continued natural disasters in markets (California and Florida), weak traffic and a cautious consumer."
Warm Fall, Tepid Holiday
October 2007 was the warmest October ever recorded in New York City and one of the top five warmest ever for the United States, according to weather-tracking firm Planalytics.
The warm weather continued to pressure retailers still reeling from the unusually warm September, which allowed consumers to put off buying cold-weather items like sweaters and jackets.
While wildfires raged through southern California for about a week last month, burning more than 2,000 homes, a rainy Saturday in the mid-Atlantic region dampened sales for a day on the East Coast, McNamara said.
The women's apparel category, which rose 1.5 percent in October, saw its highest yearly comparisons since June, McNamara said, though he was quick to say comparisons were easy because last October was a weak month sandwiched between two very strong months.
McNamara also said the average price of women's apparel purchases in October was down 3.3 percent, though the average shopping volume was up 5 percent, evidence that retailers used mark-downs to drive sales.
McNamara said the October uptick did not change his holiday expectations.
"We still expect very modest growth this year. It'll probably be one of the weakest years we've seen in a couple, but it still looks like we're growing," McNamara said.
He added that some consumers are being hurt by gasoline prices that are about 30 percent higher than a year ago and higher mortgage payments as their adjustable rate loans get reset, but that employment figures and wages have been holding up.
Last week the U.S. Labor Department reported that nonfarm payrolls rose 166,000, twice what Wall Street had expected.
"There's been some hand wringing around the consumer in general as far as 'Is the consumer tapped out?'," McNamara said, noting that sales across most areas are much slower than a year ago. "But based on the data we're seeing you'd have to say the consumer is putting up a pretty good fight still."
