Retail Sales Up, but Analysts Not Impressed : Indicators: Economists say the results are a sign holiday sales will be lackluster. Others are hoping for a turnaround.
The nation’s retail sales in November managed the biggest increase in five months, the Commerce Department said Wednesday, but analysts called the monthly gains meager for this time of year and cited the results as a sign that holiday sales would be lackluster.
The government said a surge in demand for longer-lasting durable goods helped boost November sales by 0.8% to $197.9 billion, following a 0.4% decline in October. However, analysts said November sales should have been stronger.
More recent evidence from the nation’s stores indicates a worse-than-expected consumer turnout as Dec. 25 approaches.
“Sales ought to be picking up more considering we are getting closer to Christmas,” said Kurt Barnard, a New Jersey-based retail economist. “This is a disappointment.”
Barnard said sales in November rose just 3% compared with the same month a year ago--flat when inflation is taken into account. In contrast, sales in November 1994 were up about 5% over the previous November. Barnard said much of this year’s weak increase was due to heavy discounting.
Most industry analysts have been predicting an overall holiday sales increase of 4% to 5%. Barnard is among many who have now scaled their forecast down to 3% to 4%.
Earlier this week, Telecheck Inc., a credit clearinghouse, said sales paid for by check have fallen 7.2% since Thanksgiving versus the same period last year. The International Council of Shopping Centers reported a 1.6% sales decline for the seven days ended Sunday. And the Johnson Redbook Services weekly retail report showed a fall of 2% for seven days ended Saturday.
Analysts say consumers are already burdened by high levels of debt and may lack the financial resources to significantly lift holiday spending levels. The American Bankers Assn. reported Wednesday that late payments on bank credit cards edged up in the third quarter to the second-highest level in the last 10 years.
“Given the fact that consumer installment credit is eating up more and more of disposable income, I’m surprised that the delinquencies were not higher,” said James Chessen, the banking group’s chief economist.
However, some in the retail industry still hope for robust spending. Christmas falls on a Monday this year, giving consumers a full weekend to shop.
“There are less than two weeks left to shop and I think you will see traffic return to traditional levels for the remainder of the season,” said Tracy Mullin, president of the National Retail Federation.
Analysts doubted that November’s retail sales increase would have much impact on Federal Reserve Board policymakers when they meet Tuesday to consider interest rate strategy.
Central bank officials seem divided over whether a cut in short-term rates is warranted now to spur economic growth.
Last month’s advance in retail sales was higher than expected on Wall Street, but its significance was undercut by news that the government had also lowered its estimate of sales in both September and October.
Times wire services also contributed to this report.
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Retail Sales
Seasonally adjusted, in billions of dollars:
Nov. 1995: $197.9
Source: Commerce Department
