Retailers get an early gift

Retail sales jumped sharply in November as shoppers went on a spending spree that reinforced the Federal Reserve’s view that the cooling housing market has not hurt the rest of the economy.

Data released by the Commerce Department on Wednesday showed retail sales gained 1% last month, notching their largest rise since July.

Retail sales excluding autos and 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 in January.

“The holiday sales season has started in very good form,” said Richard DeKaser, chief economist at National City Corp. in Cleveland. “This could mean consumer spending growth of 3% or better, and [gross domestic product] growth could be closer to 2.5%.”

Economic growth slowed in the third quarter to 2.2%, and many economists had expected it to fade further in the final three months of 2006 -- a view challenged by Wednesday’s data that prompted other financial firms to lift their forecasts.

“We boosted our fourth quarter ... GDP forecast to up 2.6% from up 2.3%,” economists at Morgan Stanley said in a note to clients.

“Spillover impacts from housing to consumption have clearly been minimal to this point, as a sizable recent acceleration in real income growth has provided considerable support to spending,” they said.

The numbers also endorsed the view of Federal Reserve Chairman Ben S. Bernanke, who said in late November that there had been little evidence of a negative effect on the wider economy caused by the slowing housing market.

The Fed on Tuesday held interest rates unchanged at 5.25% and warned that although growth had moderated, in part because of the substantial cooling of the housing market, some inflation risks remained.

Analysts had forecast a 0.2% rise in retail sales in November, compared with a 0.1% decline in October, and a 0.3% gain in retail sales excluding autos.

Sales excluding autos in fact rose 1.1%, as opposed to a 0.3% decline the month before, the Commerce Department said.

Auto and parts sales increased 0.9%, gasoline sales jumped 2.3% and the crucial building material and garden equipment category climbed 1.8%.

Sales at department stores and clothing stores were flat, but electronics and appliance stores gained 4.6%.

In a separate Commerce Department release, business inventories rose 0.4% in October as sales fell 0.2%. The rise in unsold stocks matched expectations by economists polled by Reuters.

The stock-to-sales ratio, which measures how long it would take to clear out inventories at the current sales pace, rose for the sixth straight month, climbing to 1.31 months from 1.3 months in September.

In other data, U.S. home mortgage applications rose to the highest levels in more than a year last week as home buying and loan refinancing continued to rebound, an industry group said.

A seasonally adjusted index of total mortgage applications jumped 11.4% in the week ended Dec. 8 to 721.2, the highest level since October 2005, after a recent drop in borrowing costs, the Mortgage Bankers Assn. said.