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US retail sales surge in November

H.S. Borji
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US retail sales advanced faster than forecast in November, as consumers opened up their wallets for the holidays amid improving wages and more plentiful jobs, a sign the US economy was firming at the end of the year.

Retail revenues in the United States rose 0.7 percent to $449.3 billion in November, following an upwardly revised gain of 0.5 percent in October, the Commerce Department reported today in Washington. That was the biggest gain in eight months. Economists forecast an increase of 0.3 percent.

Compared to November 2013, retail revenues were up 5.1 percent. Total sales from September through November jumped 4.7 percent over year ago levels, official data showed.

So-called core sales, which exclude volatile categories such as food, energy and automobiles, increased 0.6 percent in November. Core sales had risen 0.5 percent the month before. Economists forecast an increase of just 0.4 percent in the core retail sales category.

Core retail sales are used to calculate gross domestic product. The November figures suggest consumer spending was improving briskly in the fourth quarter as shoppers gear up for the holiday season. Economists currently expect the US economy to accelerate 2.5 percent annually in the fourth quarter, although the latest figures could prompt an upward revision. The economy accelerated 3.9 percent annually in the third quarter, well above forecasts. That followed a 4.6 percent increase in the second quarter that was the biggest since 2011.

Retail sales were broad-based in November, as lower energy costs helped keep inflation subdued. Eleven of the 13 major retail categories improved last month, led by a 1.7 percent gain at motor vehicle and parts dealers. Building material and garden supplies increased 1.4 percent, while sales at clothing and accessory stories rose 1.2 percent.

Retail receipts also rose 1 percent at nonstore retailers, 0.9 percent at electronics and appliance stores, 0.8 percent at health and personal care stores and 0.7 percent at food and drinking places, official data showed.

Today’s figures suggest consumers are willing to spend this holiday season, likely in response to higher wages and more plentiful jobs. The US economy added a whopping 321,000 jobs last month, the biggest single month increase since January 2012. That marked the tenth consecutive month nonfarm payrolls were above 200,000. The unemployment rate held steady at 5.8 percent last month, as expected by the consensus.

Meanwhile, average hourly earnings rose 0.4 percent in November, twice the rate of forecast and the biggest gain this year. Year-on-year, average earnings were up 2.1 percent.

Retail sales, which account for a third of consumer spending, are likely to increase in December as consumers finalize their holiday shopping plans. Rising incomes, more plentiful jobs and increased savings at the fuel pump are likely to translate into another strong month of retail sales growth, further propelling the US economy in the fourth quarter.

The Fed is scheduled to hold its final meetings of the year next week. While no changes to the main interest rate is expected, the markets will closely monitor the meetings for signs of future rate-hike action.

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