US retail spending rises healthy 0.7 per cent in November, good sign for holiday shopping

WASHINGTON - U.S. consumers ramped up spending in November on cars, appliances and furniture and made more purchases online, signalling growing confidence in the economy during the holiday shopping season.

The Commerce Department said Thursday that retail sales rose 0.7 per cent, the biggest gain in five months. October's figure was also revised higher to 0.6 per cent.

Two straight months of healthy sales suggest steady hiring is encouraging Americans to spend more this holiday season, particularly on big-ticket items. The report also shows that consumers are purchasing more at home on their computers — and less at traditional stores.

Auto sales jumped 1.8 per cent, furniture purchases rose 1.2 per cent and sales at electronics and appliances stores rose 1.1 per cent. Excluding the volatile categories of autos, gas and building materials, sales rose a solid 0.5 per cent in November.

Americans also are shifting more spending to online and catalogue retailers. Online and catalogue sales rose 2.2 per cent last month, the most in nearly 18 months.

Sales were weak at some retail chains. Clothing and grocery stores reported lower sales last month. And gains at department stores, health care and sporting goods stores were all tepid. Those trends could explain why many retail chains estimated disappointing sales over the Thanksgiving holiday weekend, one of the most critical for those businesses.

Nonetheless, Americans are spending more, which could give a much-needed boost to the economy in the final three months of the year. Consumer spending rose only 1.4 per cent in the July-September quarter, the weakest gain in nearly four years.

The economy expanded at a solid 3.6 per cent annual rate in the third quarter. But nearly half the growth came from inventory restocking, as companies added more goods to their warehouses and store shelves. More spending would ensure that businesses aren't caught with unwanted supplies and keep the economy expanding.

Consumer spending drives roughly 70 per cent of growth.

Another positive sign: Total consumer spending rose 0.3 per cent in October, the government said last week, up slightly from September's figure.

Hiring has been solid since the summer, giving more Americans paychecks to spend. Employers added 203,000 jobs in October and the unemployment rate fell to a five-year low of 7 per cent. Wages even picked up a bit and have risen 2 per cent over the past year, outpacing inflation.

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