Retail Sales in U.S. Increase by Most in Five Months

Dec. 12 (Bloomberg) -- Jobless claims in the U.S. surged by 68,000 to a two-month high of 368,000 in the period ended Dec. 7, Labor Department data showed today in Washington. Separately, Retail sales in November climbed 0.7 percent, the Commerce Department reported. Betty Liu and Michael McKee report on Bloomberg Television's "In the Loop." (Source: Bloomberg)

Americans flocked to stores and auto dealerships in November as retail sales climbed the most in five months, a sign consumer spending is emerging from a third-quarter lull.

The 0.7 percent gain followed a 0.6 percent advance in October that was larger than first reported, Commerce Department figures showed today in Washington. November sales excluding receipts at gas stations climbed the most since September 2012, reflecting broad-based strength from Internet retailers to furniture outlets to electronics and appliances establishments.

Gains in wealth from higher stock and property values, along with an improving job market, are helping brighten consumer spirits as shoppers make their way to malls with holiday gift lists. The retail figures prompted some economists to raise their fourth-quarter consumer-spending forecasts after the weakest performance in almost four years.

“We’re getting a tailwind from lower gas prices, significant tailwinds from higher wealth through equities and real estate and last, but certainly not least, an acceleration in wages,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, who accurately forecast the sales gain. “We’re going in the right direction.”

Photographer: Daniel Acker/Bloomberg

Customers exit a Best Buy Co. store ahead of Black Friday in Peoria, Illinois, on Nov. 28, 2013. Close

Customers exit a Best Buy Co. store ahead of Black Friday in Peoria, Illinois, on Nov. 28, 2013.

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Photographer: Daniel Acker/Bloomberg

Customers exit a Best Buy Co. store ahead of Black Friday in Peoria, Illinois, on Nov. 28, 2013.

Americans are also more upbeat. Confidence rose for a third week as consumers grew more optimistic about the economy, finances and the buying climate. The Bloomberg Consumer Comfort Index advanced to minus 30.9 in the period ended Dec. 8, the best reading since the first week of October, from minus 31.3.

Stocks Decline

Stocks declined for a third day, sending the Standard & Poor’s 500 Index to a one-month low, as improving economic data spurred speculation that the Federal Reserve will slow monthly bond purchases as soon as next week. The S&P 500 fell 0.4 percent to 1,775.5 at the close in New York.

Rising consumer purchases will probably help propel economic growth this quarter after a surge in inventories boosted gross domestic product in the previous three months. Household spending, which accounts for almost 70 percent of the economy, rose at a 1.4 percent annual rate in the third quarter, the slowest since the end of 2009.

Personal spending growth may top 3 percent at an annual rate for the first time since the end of 2010, economists at Barclays said in an e-mail. They raised their tracking estimate for fourth-quarter GDP by 0.2 percentage point to 2.2 percent. The economy grew at a 3.6 percent pace last quarter.

Photographer: Emile Wamsteker/Bloomberg

Companies such as Gap Inc. and Costco Wholesale Corp. aren’t taking any chances as they mark down merchandise to spur demand. Close

Companies such as Gap Inc. and Costco Wholesale Corp. aren’t taking any chances as they... Read More

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Photographer: Emile Wamsteker/Bloomberg

Companies such as Gap Inc. and Costco Wholesale Corp. aren’t taking any chances as they mark down merchandise to spur demand.

JPMorgan Chase & Co. economists boosted their tracking projection of consumer spending to around 3.5 percent from 3 percent.

Jobless Claims

Another report today showed applications for unemployment insurance payments jumped last week and the costs of goods imported in the U.S. fell in November for a second month.

The number of claims for jobless benefits surged by 68,000 in the week ended Dec. 7 to 368,000, a two-month high, according to Labor Department figures. The data are difficult to adjust for seasonal swings during the holidays, a government spokesman said as the report was released to the press.

Eight of 13 major retailer categories showed increases last month. The median forecast of 83 economists surveyed by Bloomberg called for a 0.6 percent advance in retail sales. (RSTAXAGM) Estimates ranged from gains of 0.2 percent to 1.2 percent after a previously reported 0.4 percent increase in October.

Shoppers were also encouraged by lower gasoline prices, which pushed down receipts at service stations by 1.1 percent last month, the most since April. The retail figures aren’t adjusted for inflation. The price of a gallon of gas dropped to a low of $3.18 on Nov. 11, the cheapest since February 2011, according to AAA, the nation’s largest motoring organization.

Auto Sales

Sales at automobile dealers climbed 1.8 percent, the most since June, after gaining 1.1 percent in October, today’s report showed. Excluding dealerships, retail purchases increased 0.4 percent, more than forecast.

Industry figures this month showed auto purchases climbed to a 16.3 million annualized rate in November, the highest since May 2007, according to data from Ward’s Automotive Group. November deliveries rose 16 percent for Chrysler Group LLC from the same month last year, 14 percent for General Motors Co. and more than 10 percent for Toyota Motor Corp. (TM) and Nissan Motor Co.

Sales excluding food services, car dealers, hardware stores and service stations -- the figure used to calculate GDP -- increased 0.5 percent in November after posting a revised 0.7 percent gain the prior month that was the biggest since July 2012.

Purchases jumped 2.2 percent in November at non-store retailers, the biggest gain in more than a year, today’s report showed.

Video Games

Electronics sales are getting a lift from new Playstation and Xbox consoles that debuted last month. Sales of Microsoft Corp.’s Xbox One exceeded 2 million in its first 18 days on the market as the company took on Sony Corp. (SNE)’s PlayStation 4. The $499 Xbox One and the $399 PlayStation 4 each sold more than 1 million units in their first 24 hours in stores.

Demand at building-material stores increased 1.8 percent in November, the most since July, today’s report showed, indicating the rebound in housing is giving some companies a boost. Home Depot Inc., the largest U.S. home-improvement retailer, expects to meet a profitability goal a year earlier than planned as rising housing prices prompt an increase in renovations.

Today’s report also showed why some retailers such as American Eagle Outfitters Inc. and L Brands Inc., owner of the Victoria’s Secret and Bath & Body Works chains, reported disappointing sales. Demand at clothing stores fell 0.2 percent last month, while receipts at general merchandise stores rose 0.1 percent.

Research Reports

ShopperTrak, a Chicago-based researcher, said purchases over the four-day Thanksgiving holiday period rose 1 percent, citing sales and traffic data as well as receipt information that it compiles primarily from mall-based sellers of general merchandise, apparel, furniture and electronics. The holiday-shopping period that runs through Christmas typically accounts for 20 percent of retailers’ annual profit, according to the group.

Industry Black Friday weekend sales estimates often differ from government figures because they’re based on consumer surveys rather than actual receipts. They also encompass a shorter timeframe, a four-day weekend, while the Commerce Department’s report includes the entire month.

Business conditions remain “volatile and promotional,” putting pressure on profit margins, said Robert Hanson, chief executive officer of American Eagle Outfitters. The Pittsburgh-based apparel retailer reported a 6 percent drop in Thanksgiving week revenue from the same period a year ago.

“We continue to operate in the most challenging sector of retail, where there has been intense promotional competition and tepid consumer spending,” Hanson said on a Dec. 6 earnings call. “2013 is not the year we’d planned for.”

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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