WASHINGTON – U.S. consumers started the holiday shopping season in a jollier mood than Wall Street expected, as November retail sales rose on strong spending for home furnishings and improvement supplies, the government said on Thursday.
The Commerce Department said November sales rose 0.4 percent to a seasonally adjusted $302.53 billion. Excluding autos and parts, sales were up a larger 0.5 percent. The gains were bigger than Wall Street analysts had expected and show the U.S. consumer continues to provide key support for the wobbly economy. Retail sales are a large part of consumer spending, which makes up about two-thirds of overall U.S. economic activity.
November's gain was led by a 2.3 percent increase in sales at furniture and home furnishing stores, the biggest advance in the category since January 2001, according to Commerce. Demand for building material and garden supplies also was strong, rising 1.2 percent.
However, one weak spot in the report was a sharp 1.4 percent decline in department store sales.
Wall Street had expected sales to rise by a smaller 0.3 percent overall and only 0.2 percent excluding autos. November's gain, as well as an upward revision to October sales — to a 0.1 percent increase from a flat reading — could boost growth forecasts. After growing at a 4.0 percent annual clip in the third quarter, the U.S. economy is expected to post a much slower growth rate in the current quarter. While housing has remained strong, boosted by low interest rates, manufacturing and the job market have weakened in recent months.
On Tuesday, the Federal Reserve left short-term interest rates unchanged but hinted it saw signs the economy may be emerging from the doldrums. "The limited number of incoming economic indicators since the November meeting, taken together, are not inconsistent with the economy working its way through its current soft spot," the Fed's Open Market Committee said in its post-meeting statement.