Retail Sales Up as Consumers Aid Economy
Retail sales rose more than expected in November as consumers, the engine of a tepid U.S. economic recovery, kept spending while the job market worsened, the Commerce Department reported Thursday.
A surge in spending on furniture and on electronics at stores such as Best Buy Co. pushed retail sales 0.5% higher, excluding new autos, the Commerce Department said. At the same time, the Labor Department said first-time claims for unemployment benefits rose to an eight-month high.
“We still have a jobless recovery,” said Robert Gay, an economist at Commerzbank in New York. The retail report “is consistent with our view that consumers are more cautious in the following sense: They’re buying less expensive items and more basic items like electronics, gadgets and TV sets for Christmas.”
Shoppers are shouldering the recovery amid scant signs that companies have the confidence to invest in plants and equipment. The unemployment rate is 6%, matching an eight-year high set in April, and the economy probably grew just 1.4% this quarter, according to the latest Blue Chip Economic Indicators.
Economists had expected sales excluding new autos to rise 0.2%, based on the median of 59 forecasts.
The gain in retail sales probably will be insufficient to keep spending in the fourth quarter from growing at the slowest pace in almost a decade, economists said.
The 83,000 increase in first-time jobless claims to 441,000 last week probably was caused by seasonal adjustment problems and overstates the weakness in the labor market, economists said.
The number of workers continuing to collect unemployment benefits fell in the last week of November to 3.284 million, the lowest since September 2001.
Sales at stores open at least a year rose 2% last week from a year earlier, compared with a 4% gain the week before, according to a Bank of Tokyo-Mitsubishi Ltd. and UBS Warburg report. Bank of Tokyo economist Mike Niemira slashed his December sales forecast by half, to a 2.5% increase.
The retail statistics also underscore the view of Federal Reserve policymakers that the economy is improving.
“The limited number of incoming indicators since the November meeting, taken together, are not inconsistent with the economy working its way through its current soft spot,” central bankers said Tuesday after announced a decision to keep their target interest rate at a 41-year low of 1.25%.
While the U.S. economy shows signs of picking up, the European Central Bank cut its economic growth forecast, auto sales fell and French factory production tumbled, the latest evidence that the region’s economy is stagnating.
The economies of the dozen nations sharing the euro will grow as little as 1.1% next year, the ECB said, half the rate predicted in June. Western European auto sales dropped 6.2% in November, the European Automobile Manufacturers Assn. said, and France reported that industrial output fell 0.6% in October, the most in a year.
In the United States, sales of furniture and home furnishings rose in November by 2.3%, the biggest increase since January 2001, after rising 0.2% in October. Sales at electronics and appliance stores rose 0.9% after increasing 1% the month before.
“The consumer is continuing to provide support to the economy -- households are not caving or retrenching at this time,” said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. “It bodes well for growth.”
Best Buy, the No. 1 U.S. electronics retailer, said last week that third-quarter sales increased 16%. La-Z-Boy Inc., the largest U.S. maker of home furniture, last month reported a 1.1% rise in sales during the three months that ended Oct. 26.
Sales at grocery and beverage stores increased 0.9%, the biggest gain since June 2000, after rising 0.1% a month earlier. Internet merchants and catalog sales rose 1.7% after rising 1%.
“Heading down the homestretch into the holiday shopping season, there’s no evidence that consumers are on the verge of collapse,” said Gregory Miller, chief economist at SunTrust Banks Inc. in Atlanta.
In a separate report, the Labor Department disclosed that prices of imported goods fell 1% in November, the biggest decline in almost a year and evidence of tame inflation.
The Commerce Department said the deficit in the U.S. current account -- the broadest measure of international trade because it includes investments -- narrowed to $127 billion in the third quarter. In the previous three months, it reached a record $127.6 billion
