Retail Sales Up Strong 0.8% as Holiday Shopping Begins
In an unexpectedly strong showing, retail sales climbed 0.8% in November as consumers began the Christmas shopping season by spending generously on home furnishings and apparel, the Commerce Department said Wednesday.
The retail figures, along with a government report indicating a shrinking U.S. trade deficit in the third quarter, eased some concerns about the possibility of the economy sinking into recession. “It reassures people that it isn’t going to be a disastrous Christmas,” said Sandra Shaber, an analyst in Washington with the Futures Group.
But November’s results came as cold comfort to many of the nation’s major retailers, which have offered sharp, profit-squeezing price markdowns to bring in customers.
“If you’re losing a bit on each sale, you can’t make it up on volume,” said Carl Steidtmann, chief economist for the retail consulting firm Management Horizons.
Added Rosalind Wells, chief economist of the National Retail Merchants Assn.: “Retailers can get pretty good sales numbers and still lose their shirts.”
In fact, one of the nation’s biggest retailers, New York-based R.H. Macy & Co., reported Wednesday that markdowns contributed to its widened loss of $33.1 million in its first quarter ended Oct. 28. Sales were up 5.2% to $1.71 billion. In Southern California, Macy’s owns Bullock’s, Bullocks Wilshire and I. Magnin.
Economists said most of last month’s sales gains appeared to be coming at smaller retail companies specializing in apparel, home furnishings, furniture and home-improvement products.
“People are spending this Christmas, but it’s shaping up as a practical Christmas,” said David A. Wyss, chief financial economist at Data Resources. “People are buying furniture and apparel, things they think that people on their Christmas lists need.”
Analysts, however, hewed to earlier forecasts that the holiday shopping season would yield moderate sales gains in the 5% to 7% range and narrow profit margins for the big retail chains.
They also noted that November’s nationwide rise in retail sales to a seasonally adjusted $144.6 billion partly reflected a modest comeback from October’s sickly performance. The government said Wednesday that October’s sales fell 1.3%, a revision from a previously reported decline of 1%.
Compared to sales in November, 1988, retail results last month were up only 3.6%, slightly less than the economy’s overall rate of inflation.
Along with sluggish department store sales, the November report also reflected weak, but somewhat improved, car sales. In early December, however, the nation’s eight major auto makers suffered a 27.9% decline in car sales from a year earlier, according to results issued Wednesday.
In the category-by-category breakdown, the November retail report showed that sales of durable goods--big-ticket items expected to last at least three years--were up 0.7% after falling 3% in October. That bucked analysts’ earlier predictions that consumers would shy away from costly purchases, but it seemed to fit a broader pattern for the month of heavy spending on household goods.
Sales of building materials, for instance, were up 2%, possibly reflecting some repairs made due to Hurricane Hugo and October’s Bay Area earthquake. The category was off 1.1% in October. Furniture and other home furnishing sales gained 1.6%, on top of a 0.8% increase the previous month.
For non-durable goods, sales rose 0.9%, following a 0.3% decline in October. In fact, all non-durable goods categories except drug stores sales posted increases: apparel, 2.4%; general merchandise including department stores sales, up 0.7%; grocery stores, 0.8%; gasoline stations, 0.9%, and restaurants and bars, 0.9%.
