Retail sales rise more than expected

December 11, 2009

Retail sales rose more than expected in November, boosting hopes that the all-important consumer sector will support the fragile recovery.

The government's report came as a surprise because the nation's retailers have been reporting generally lackluster results for the start of the holiday shopping season. Consumer spending accounts for 70 percent of overall economic activity.

But retail sales rose 1.3 percent last month, after a 1.1-percent October gain, the Commerce Department said Friday. It was the biggest advance since sales jumped 2.4 percent in August, and more than double the 0.6-percent increase economists had expected.

Excluding autos, retail sales rose 1.2 percent, triple the 0.4-percent advance economists expected.

A 6-percent surge in sales at service stations, partly reflecting higher gasoline prices, led the overall gain. But even excluding that jump, retail sales posted a respectable 0.8-percent rise in November.

Economists' general view has been that double-digit unemployment levels would keep consumers cautious in their spending and act as a drag on the economy as it struggles to emerge from the worst recession since the 1930s.

The November retail sales report showed that auto sales rose 1.6 percent, a solid performance after a 7.1-percent surge in October.

Sales at department stores increased 0.7 percent, and the broader category that includes big retailers such as Wal-Mart Stores Inc. and Target Corp. posted a 0.8-percent increase.

Sales also jumped 2.8 percent at electronics and appliance stores, and 1.5 percent at hardware stores.

Sales did fall 0.7 percent at furniture stores, something of a surprise since analysts had expected the recent rebound in home sales to bolster demand for furniture.

After posting two straight gains following more than a year of declines, big chain retail stores earlier this month reported a dip in November sales. Those figures don't include Wal-Mart, the world's largest retailer, which no longer reports monthly sales.

But a diverse group of stores, including Macy's Inc., Saks Inc., Abercrombie & Fitch Co. and Target, did post sharper-than-expected sales declines in November.

The overall economy rose at an annual rate of 2.8 percent in the July-September quarter, the first increase after a record four straight declines. Analysts had forecast growth to sag a bit in the current quarter and the first half of 2010 because they expected consumer spending would weaken under the weight of 10 percent unemployment.

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