Retail Sales, Wholesale Prices Increase Slightly : Economy: Analysts say the statistics suggest that the recovery, while weak, at least appears stable.
Solid gains at clothing and department stores contributed to a 0.3% increase in retail sales in November, the Commerce Department reported Thursday, giving some economists reason to hope that Christmas-season buying may not be totally chilled by recession.
At the same time, the Labor Department reported that inflation at the wholesale level increased a scant 0.2% last month, reversing an ominous October surge of 0.7% and calming fears that commodity inflation might compound the economy’s woes.
In a separate report, the Labor Department said the number of unemployment benefit claims filed by newly jobless workers dropped to 414,000 during Thanksgiving week from the previous week’s 475,000. But analysts said the decline is illusory because there were only three working days available for filing claims.
Economists said the statistics suggest that the economy, while weak, at least appears stable. While there continues to be widespread concern that the anemic recovery could collapse back into a renewed recession, such concerns are not exacerbated by Thursday’s reports.
“Taken together, all today’s numbers certainly don’t confirm the notion that the economy is double-dipping or that it has never emerged from recession,” said economist Irwin L. Kellner of Manufacturers Hanover in New York.
Inflation, particularly at the wholesale level, has been well under control all year. As a result, analysts were primarily interested in the faint glimmer of economic life apparent in the retail sales report.
The 0.3% increase in sales last month was slightly higher than market expectations, and followed an October in which an original estimate of a 0.1% decline was revised upward Thursday to a 0.1% gain.
“There was a lot of worry about pre-Christmas buying,” said analyst David Wyss of DRI/McGraw Hill, a Lexington, Mass., forecasting firm. “November is always the first indicator of that, and given the lateness of Thanksgiving this year and the fact that sales at department stores and apparel stores were strong, this is a pretty good number. It suggests people have been out buying.”
Clothing store sales jumped 1.9% in November, and department store sales increased 0.7%. Taken together, those outlets account for the bulk of Christmas-season buying.
For that reason, analysts generally shrugged off stagnant sales of durable big-ticket items, which were constrained by a 2.2% drop in retail sales of building materials, hardware and similar items. As a rule, holiday shoppers are not in the market for refrigerators, gas furnaces or gardening tools.
Likewise, a 0.6% increase in automotive sales was taken as a moderately decent sign of life in an industry that has been troubled all year.
“Considering holiday shopping didn’t start until the end of the month, this showed consumers were responding to widespread retail price cutting,” said Kellner, the Manufacturers Hanover economist.
Sales of non-durable goods increased 0.4% to $98.1 billion, while durable goods sales were virtually unchanged at $55 billion. In all, sales for the month were 0.4% above November, 1991, when the economy was four months into the recession and still shrinking.
The 0.2% gain in wholesale prices, as reflected in the Labor Department’s producer price index report, calmed concerns that October’s price hikes possibly heralded an upsurge in inflationary pressures.
Weather and insect-caused crop damage pushed wholesale vegetable prices up a whopping 23%, but equally steep declines in other food commodities pushed all food prices at the wholesale level down 0.1%.
Stable energy prices and slightly lower food prices have helped hold the price increases of finished goods at the wholesale level to an annual rate of only 0.2% so far this year. Over the last 12 months, producer prices have actually declined 0.5%, reflecting steady energy price declines in the wake of the Persian Gulf War and a stubborn recession.
Overall, the producer price index, before seasonal adjustments, was unchanged at 122.3 from a base of 100 in 1982, meaning that a cross section of finished goods costing $100 in the base year would have cost $122.30 in both October and November.
A Look at Some Key Indicators Retail Sales Up 0.3% Analysts say the gain shows the economy neither collapsing nor gaining momentum. Figures are seasonally adjusted, in billions of dollars. Nov., ‘91: $153.1 Oct., ‘91: $152.7 Nov., ‘90: $152.7 Source: Commerce Department Producer Prices Edge 0.2% Higher U.S. says the hike in costs for finished goods is due to falling food prices and the best energy prices since July. Seasonally adjusted change from prior month Nov., ‘91: +0.2% Oct., ‘91: +0.7% Nov., ‘90: +0.4% Source: Labor Department Unemployment benefit claims fell 61,000. Analysts discount much of the drop because the Thanksgiving holiday gave laid-off workers less time to file claims. Consumer prices: will be reported today. Analysts believe that the report will also show only a small price increase of around 0.3%. Many believe that the Federal Reserve will move to cut interest rates further.
