Clear73° WeatherClear73° Weather

Retail sales increase for fifth consecutive month

Shoppers walk past sale banners Friday at the New York & Company store at Tyrone Square Mall in St. Petersburg. Analysts say discounts are driving sales.

SCOTT KEELER | Times

Shoppers walk past sale banners Friday at the New York & Company store at Tyrone Square Mall in St. Petersburg. Analysts say discounts are driving sales.

WASHINGTON — Retail sales rose for a fifth straight month in November, suggesting a strong holiday shopping season and raising hopes that consumers will boost the economy in the coming months.

The best month for department stores in two years helped lift retail sales 0.8 percent last month, the Commerce Department said Tuesday.

The 2.8 percent rise in department store sales represented a solid rebound from a 0.9 percent drop in October.

Analysts said that heavy holiday discounting, which started as early as October, and an improving economy were helping to boost spending.

November's sales figures were better than economists had expected, prompting many to revise their forecasts for consumer spending growth in the October-December quarter.

Consumer spending is closely watched because it accounts for 70 percent of total economic activity. A drop in retail sales in May and June had raised fears that the economy could be in danger of slipping back into recession.

But since then, sales have posted five straight increases. Several economists said the improvement in retail sales and the pending tax-cut package making its way through Congress were prompting them to revise their estimates for consumption spending for the October-December quarter and the first part of 2011.

"The continued improvement in retail sales is indicative of a consumer that continues to gradually rebuild confidence that was shattered by the credit crisis," said Jim Baird, chief investment strategist for Plante Moran Financial Advisors.

But Paul Dales, senior U.S. economist at Capital Economics, said that the current spending gains may not last unless job growth picks up.

"This tentative consumer revival may not be the start of a prolonged period in which households become the engine of the economy once again," he said, noting that the weak job growth means personal incomes, after adjusting for inflation, are rising by less than 1 percent. That's far below what is needed to support strong spending gains.

In November, specialty clothing stores sales rose 2.7 percent, after a 1.2 percent gain in October. Sales at general merchandise stores, a category that includes big retail chains such as Walmart and Target, increased 1.3 percent — an improvement from the 0.3 percent rise in October.

Sales were down in November at furniture stores, appliance stores and hardware stores.

Auto sales slipped 0.8 percent. But that came after a sizable 5.8 percent surge in October sales by auto dealers.

The holiday shopping season accounts for as much as 40 percent of annual revenue and profits for retailers. In an effort to spur demand, many stores trotted out the Black Friday discount stickers on selected merchandise as early as late October.

Retail sales increase for fifth consecutive month 12/14/10 [Last modified: Monday, November 7, 2011 1:41pm]

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...