Retail Sales Rise Just 0.2% in November
Retailers rang up smaller-than-expected sales gains in November, the government said Thursday, which may point to a less-than-merry Christmas for store chains.
Retail sales rose 0.2% last month, the Commerce Department said, after falling an unrevised 0.2% in October. The November gain was less than half the 0.5% increase analysts had expected.
And even if Christmas shopping picks up this month, the ongoing economic crisis in Asia will deprive the U.S. economy of momentum next year, analysts said, and that in turn will eventually slow sales.
Two indicators that businesses are bracing for further aftershocks from Asia are General Motors Corp.’s recently announced plans to cut production, and word that Chrysler Corp. may boost rebates to bolster its flagging sales. “A slowing is in the cards,” said Robert Dederick, an economic consultant at Chicago’s Northern Trust Co. “The question is whether this is going to be a sedative or an outright depressant.”
But the retail report bolstered the bond market and drove interest rates lower as investors reasoned the data will encourage Federal Reserve Board policymakers to hold rates steady when they meet Tuesday. The yield on the 30-year Treasury fell to 5.99% from Wednesday’s 6.07%.
The government’s survey of 4,100 retailers came early in the month and may not fully reflect shoppers’ intentions for the Thanksgiving-to-Christmas sales period, but analysts said it pointed to sluggish spending for the holidays.
November’s small rise followed sales declines of 0.2% in October and 0.3% in September. The weakness is important not only to retailers because consumer spending fuels two-thirds of the economy.
“The retail sector has started out on a weak footing for the Christmas season,” said economist Lynn Reaser of Barnett Banks Inc. in Jacksonville, Fla. The slow start has complicated prospects for store chains that rely on the Christmas season for up to half their annual sales and profits.
Several analysts said that despite the problems in Asia, the U.S. economy and job market remained strong.
“The fundamentals are highly favorable--strong employment, solid income gains, high levels of consumer confidence--so there is no reason to think the consumer is going to just go to bed for the holidays,” said Dederick.
The report showed sales of new cars, which account for about a quarter of total sales, rose 0.2% last month after falling 1.6% in each of the two previous months. Strong unit sales reported by auto makers had pointed to a bigger increase, but it did not show up in the November report.
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Retail Sales
In billions of dollars, seasonally adjusted.
Nov.: $213.8
