Retail Sales Up Nicely

WASHINGTON – The nation's shoppers descended on stores with a fresh burst of energy last month, propelling U.S. retail sales (search) by 0.9 percent. The open-wallet mind-set raised new hope that the overall economic recovery will be durable.

Last month's sizable increase came after retailers' sales dropped by 0.3 percent in September and were flat in October, the Commerce Department (search) reported Thursday. The increase in retail sales in November — the largest advance since August — represented a better showing than economists were expecting. They were forecasting a 0.7 percent rise.

Consumer spending accounts for roughly two-thirds of all economic activity. Because of that, consumers play a key role in determining how the recovery unfolds. Consumers have kept their pocketbooks and wallets sufficiently open to keep the economy going even during difficult economic times.

In a second report from the Commerce Department, businesses, feeling more confident about the economic recovery's staying power, boosted inventories in October by a solid 0.4 percent for the second month in a row. Businesses' sales, meanwhile, rose by 0.7 percent in October, on top of a 0.9 percent rise in September.

Consumers' appetite to spend in November pushed up sales for many types of goods — from cars and electronics and appliances to health and beauty products.

Excluding sales of automobiles, sales at all other merchants rose for the second straight month by 0.4 percent in November. That showing was slightly stronger than the 0.3 percent rise economists were predicting.

Amid signs that the economy is gaining traction, the Federal Reserve (search) on Tuesday decided to hold a key short-term interest rate at a 45-year low of 1 percent. Near rock-bottom rates may motivate consumers and businesses to boost spending and investment, which would lift economic growth.

The economy grew at a stellar 8.2 percent rate in the third quarter, the best performance in nearly two decades.

Some analysts believe the economy is growing at a slower but still healthy rate of about 4 percent in the current October-to-December period, as some of the stimulus that helped in the third quarter — another round of tax cuts and a wave of mortgage refinancing — fades.

Extra money from the tax cuts and the refinancing frenzy helped put consumers in a better position to spend lavishly during the summer. And they did. After the summer buying spree, consumers took a breather in September and October.

The steady reading on sales in October was based on revised figures released Thursday. That actually marked an improvement from the 0.3 percent decline first estimated by the government a month ago.

That, along with November's solid increase in retail sales, suggested that consumers are still helping to support economic growth in the current quarter, though they aren't spending with the abandon they demonstrated in the third quarter, which economists expected.

Sales at automobile dealerships rose by 2.6 percent in November, the largest increase since March and a turnaround from the 1.4 percent drop in October.

At electronics and appliances stores, sales went up by 2.2 percent last month, following a 1.6 percent increase. Sales at health and beauty stores rose 1.3 percent, compared with a 0.7 percent increase in October. Furniture sales increased 1 percent in November, up from a 0.4 percent rise the previous month. Sales at clothing stores rose 1.1 percent, an improvement from the flat reading in October.

Sales at gasoline stations increased 1.6 percent, compared with a 1.9 percent drop in October, as prices rose at the pump. Excluding gasoline sales, sales at all other stores still went up by a brisk 0.8 percent.

There were some weak spots, though. Sales at department stores fell by 1.1 percent last month, on top of a 1 percent decline in October. Sales of sporting goods, books and music dipped by 0.5 percent in November, following a 0.3 percent decline.