WASHINGTON (12/13/13)--Talk about industry "driven" data. Retail sales rose by 0.7% in November with about half that increase, 0.3%, attributed to car purchases, according to the Commerce Department.
Core sales, which don't account for automobiles, food services, gasoline or building materials, rose by 0.5% after a 0.7% increase in October.
The data, released on Thursday, revealed the strongest growth for retailers in months. The monthly increase was the strongest since June. Annual growth last month, at 4.7%, was the strongest it has been since July.
Economists polled by Reuters expected sales to increase by 0.6% after a 0.4% increase in October--a data point revised up to 0.6% in Thursday's report (Reuters Dec. 12).
Car sales and auto parts were up by 1.8% in November. Building materials and garden equipment purchases also increased by the same amount. Rounding out the strongest performing sectors were electronics and appliance retailers, who saw receipts gain by 1.1%, and furniture merchants, who saw a 1.2% increase in sales.
A report released earlier this month by AutoData Corp. showed that the annualized rate of car sales in November, at 16.4 million units, shattered expectations (MarketNews Dec. 5).
The strength of non-store retailers and electronics also indicates that the release of the iPhone 5 impacted nationwide sales figures (Economy.com Dec. 12).
The report comes on the heels of a recent trend of good news for the economy. A preliminary measure of the Thomson-Reuters/University of Michigan consumer index was up to 82.5 in December from a final November reading of 75.1 (The Wall Street Journal Dec. 12). If the early analysis holds up, the reading would reveal consumer confidence at its highest level in over a year.
The Wall Street Journal said that higher spending and confidence is bolstered by stronger net job growth, stock market gains and appreciating home values, despite unemployment being historically high and post-recession wage gains being unimpressive.
The Journal also said steps taken in Congress this week toward a two-year budget that eases some of the sequestration cuts could boost economic growth in 2014.
The positive news could cause the Federal Reserve to claw back its monthly $85 billion quantitative easing program when its policymaking group, the Federal Open Market Committee, meets Dec. 17-18, according to the Journal. Reuters analysts said that the Fed could start reining in the program by March.
Moody's analysts, however, said that volatility in home equity, gasoline and weather could lead to inconsistent consumer behavior over the coming months. They also pointed out that food sales were down in November due to the reduction in federal spending on food stamps, but said that the damage of federal cuts is past its peak.
The holiday season is a significant time of year for consumer spending, which accounts for about 70% of the U.S. economy. A joint Credit Union National Association and Consumer Federation of America survey conducted in November found that more Americans planned on spending more this holiday season, while fewer planned on spending less (News Now Dec. 2).