Retails sales rise in November as shopping picks up

By Josh Boak and Anne D'Innocenzio
AP Business Writers

WASHINGTON (AP) - Holiday shoppers are off to a solid but unspectacular start as retail sales registered a modest gain in November.

The Commerce Department said last Friday that retail sales rose a seasonally adjusted 0.2 percent to $448 billion last month. This marks an improvement after months of lackluster spending as cheaper gasoline depressed overall sales volumes. Retail spending improved a mere 0.1 percent in October after a 0.1 percent drop in September.

But in November, shoppers upped their spending at clothiers, sporting goods stores and electronics outlets. Spending at online retailers such as Amazon advanced a healthy 0.6 percent. General merchandise stores also improved, but in a bleak sign for chains such as Macy's sales at department stores were flat.

"Despite a weak-ish headline, retail spending in November suggests a firm pace of consumption," said Bricklin Dwyer, a senior economist at the bank BNP Paribas.

The report should provide some relief after evidence of tepid shopping during Black Friday - the day after Thanksgiving when consumers often splurge - and provide a better sense about their confidence in the broader economy. Initial figures indicated that many consumers stayed at home, potentially choosing to browse for holiday gifts online instead of wading through crowds at stores.

The National Retail Federation estimated that spending averaged $299.60 per person over Thanksgiving weekend. That was down from $381 last year. But the trade association says the figures are not comparable due to methodology changes.

But the retail sales report confirms that consumers are shifting away from malls and shopping plazas. Online sales advanced 7.3 percent from a year ago. People are also more eager to eat out, with expenditures at restaurants increasing 0.7 percent in November and 6.5 percent over the past 12 months. Americans have stepped up their purchases of cars this year, although sales at auto dealers slipped 0.6 percent last month.

Tom McGee, president and CEO of International Council of Shopping Centers, the mall trade group, said that he's sticking to a 3.3 percent sales growth for the November and December period.

"I think this is a strong holiday season," he said. "But clearly changes are taking place that are beginning to take hold."

He noted that Black Friday weekend is no longer as key a barometer because the season starts earlier and earlier.

Mother Nature is also hurting business. Unseasonably warm weather that has continued into December has squelched appetites for cold weather items. That has forced clothing stores like Macy's to step up more discounts than planned to get rid of coats and heavy sweaters. Macy's was offering online "web buster" deals like cashmere sweaters for $49.99, down from $139.

Some shoppers are waiting until the last minute because of tight family budgets.

Mildred Vasquez, 38, of East Harlem, was shopping last weekend for clothes with her two boys, ages 4 and 11 at a Target store. She said that it's hard to keep up with the higher costs of basics like rent. So she is waiting until the week before Christmas to buy gifts.

"I am starting after the 17th," Vasquez said. "I am waiting for the deals."

Lower gas prices have restrained retail sales growth. Purchases at gas stations fell 0.8 percent in November and have tumbled 19.9 percent this year. Prices at the pump nationwide are averaging $2.01 a gallon, down 24 percent from a year ago, according to AAA.

Excluding gas stations, retail sales have advanced 3.6 percent this year. That compares to 1.4 percent when including gas stations in retail sales.

The average household has an additional $660 to spend this year because of cheaper gas, according to the government. Still, it's unclear whether cheaper gas has fueled more consumer confidence. Many Americans appear to be pocketing the savings.

Total consumer spending - which includes services - rose just 0.1 percent in October, according to the government. But the savings rate was 5.6 percent of after-tax income, the highest monthly savings level in nearly three years.

Economists watch the retail sales report closely because it provides the first indication each month of the willingness of Americans to spend. Consumer spending drives 70 percent of the economy. Yet retail sales account for only about one-third of spending, with services such as haircuts and Internet access making up the other two-thirds.

Published: Tue, Dec 15, 2015