WASHINGTON -- An important measure of consumer spending cooled in November compared with recent months, but was well up from a year earlier, suggesting a modestly positive start to the holiday shopping season despite election uncertainly early in the month.
Continue Reading Below
Retail sales, a measure of purchases at stores, restaurants and online, advanced a seasonally adjusted 0.1% in November from a month earlier to $465.5 billion, the Commerce Department said Wednesday. The gain was weaker than the 0.3% increase economists surveyed by The Wall Street Journal had forecast, and down from a 0.6% October gain and 1% September advance.
November sales increased 3.8% from a year earlier, suggesting the holiday-shopping season began on better footing than in 2015 and that consumers have the capacity to support the economic expansion during the final months of the year.
Holiday spending is "off to a solid start," said Gus Faucher, economist at PNC Financial Services Group. "However, gains for traditional retailers will be much weaker due to the increasing reach of online sales." November's annual gain was the second strongest recorded since January 2015.
November, as the traditional start of the holiday-shopping season, is a key month in the sector, especially for department stores, clothing outlets and online sellers. But what the latest numbers say about holiday shopping is difficult to read because last month also included the Nov. 8 presidential election. Some retailers said election uncertainty caused consumers to be cautious early in the month.
The week of the election "was worse than a snowstorm in terms of nobody wanting to go out and buy stuff," Costco Wholesale Corp. Chief Financial Officer Richard Galanti told investors last week. Traffic improved later in the month, he said, and the company reported overall sales growth for the first four weeks of November, compared with a year earlier.
Continue Reading Below
Retail sales were sluggish during the first two weeks of the month, according to separate data from Redbook Research, but then picked up momentum heading into Thanksgiving weekend. The spending improvement coincided with rising stock prices and better consumer-confidence readings.
Wednesday's report showed uneven spending gains from a year earlier.
Sales at nonstore retailers, a category that includes internet merchants such as Amazon.com Inc., were up 11.9% compared with a year earlier. That suggests online sellers are grabbing a bigger share of holiday sales.
United Parcel Service Inc. and FedEx Corp. are straining to keep up with holiday-related shipping volumes that surpassed expectations, according to data from ShipMatrix Inc. UPS is relocating headquarter staff to handle the demand generated for online purchases.
But department store sales slipped 6.4% from November 2015 and sales at electronics and appliance stores fell 3.8% from a year earlier and general merchandise purchases fell 1.3%. Clothing store sales improved a modest 0.9% from last year.
Car and truck sales fell last month, but rose 3.3% from a year earlier. Gas station sales advanced 4% from a year earlier. Restaurant sales increased 4.9% from a year ago. Those categories are less closely tied with holiday gift-giving.
Consumer spending figures have generally trended up over the past year. Steady job gains and signs that wages are picking up after years of slow growth support spending.
A low unemployment rate and steady economic growth led by consumers, combined with firmer inflation, could give Federal Reserve policy makers confidence that the economy is strong enough to absorb an increase in the central bank's benchmark interest rate. Officials conclude a policy meeting Wednesday afternoon and many economists expect them to raise the rate for the first time in a year.
Write to Eric Morath at firstname.lastname@example.org