Retail Sales Rose 1% in November, Handily Beating Estimates
Retail sales rose a much greater-than-expected 1% during November, as consumers battered by a multitude of economic woes came roaring back and pushed sales up by the largest amount in four months.
The increase was much stronger than the 0.2% that analysts polled by Dow Jones were expecting, and follows three straight months of lackluster performance. Sales were flat in August and had fallen in September and October.
The Commerce Department said that sales excluding autos rose by 1.1%, much better than the 0.3% expected by analysts and a turnaround from the 0.3% decline in October.
Retail sales excluding autos and also gasoline, a reading viewed as a more reliable core measure of household spending, increased 0.9%. It was the largest rise since the 2.5% gain notched in January.
"I see the economy growing, but at a slower rate than last year," Richard Hastings, senior retail analyst at Bernard Sands, told CNBC. "The housing market is a big problem – but it hasn’t been bad enough fast enough to derail the consumer."
The November gain of 1%, which was the best showing since a 1.4% increase in July, was coming at a critical time at the start of the holiday shopping season. Still, it was unclear whether the boom seen in November would carry through the entire season or into next year.
Some economists cautioned that the November jump could turn out to be a one-month blip rather than the start of a trend of stronger sales.
"We think it is very likely that sales will either be revised down or there will be a hefty drop in December," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
Michael Ryan, head of UBS Wealth Management Research, told CNBC's "Squawk on the Street" that these monthly numbers are hard to forecast. And one month of strong numbers doesn’t counteract the slowing trend we’re seeing in housing and the overall economy, he says.
“We just don’t believe that the pace of consumer spending can continue at the same level into 2007,” Ryan told CNBC.
But other analysts said the rebound, while much stronger than expected, fit with their view that consumer spending this holiday season will post solid, if not spectacular, gains.
Electronics, Appliances Strong
The November increase reflected widespread strength in a number of areas, led by a 4.6% surge at electronics and appliance stores as customers snapped up the latest flat-screen televisions for holiday gift giving.
Auto and parts sales rose 0.9% increase, which followed a 1% rise in October. Gasoline sales were up 2.3% in November, following a 5.3% drop in October, a drop that reflected falling pump prices rather than a lower volume of sales.
The crucial building material and garden equipment category climbed 1.8%.
However, sales at specialty clothing stores were unchanged in November and sales at furniture stores edged down 0.1% after an even bigger 0.7% fall in October, weakness that reflected the big slowdown in home sales this year.
Sales at department stores and clothing stores were both flat. Sales rose 0.9% at health and personal care stores and 0.7% at restaurants and bars. Food and beverage stores rose 0.9%.
Sales advanced 1.3% at other retail outlets, including Internet shopping and mail-order.
Many retail stores reported that customer traffic has not been as strong after a surge right after Thanksgiving when consumers were lured into stores to take advantage of attractive incentive deals.
Consumer spending slowed dramatically in the spring and summer as Americans were hit with surging gasoline prices, which left them with little to spend on other items. They also had to deal early in the year with rising interest rates, which made their credit card purchases more expensive, and with a cooling housing market, which made them feel less wealthy as the values of their homes slipped.
However, economists believe consumer spending will stabilize in coming months, reflecting in part the retreat in gasoline prices from the record highs above $3 per gallon set in the summer. Consumer spending is closely watched because it accounts for two-thirds of total economic activity.