US retail spending jumped 1.3 percent in November, according to government data Friday that offered fresh optimism for the troubled American consumer going into the critical holiday shopping period.
The Commerce Department report on retail sales, seen as a key to renewed economic growth, was much stronger than analyst expectations for a 0.6 percent rise.
Some special factors pushed up sales, including a 6.0 percent rise in gasoline sales, a figure affected by higher prices. But electronics sales rose 2.8 percent and auto sector sales 1.6 percent.
Excluding volatile vehicle and gasoline sales, retail spending was up 0.6 percent, a positive sign for the economy in which two-thirds of activity comes from consumer spending.
"The increase in November retail sales is encouraging. It implies that households continued to spend going into the key Christmas shopping period," said Paul Ferley at RBC Economics Research.
"This report confirms that the economy is sustaining positive growth in the second half of this year, but the pace is relatively moderate given the extent to which activity had dropped through the recession."
Nonetheless, the report suggests American consumers began to gain confidence at the start of the holiday season, which represents a large portion of overall sales and is critical for many retailers.
"Retail sales soared in November," said Joel Naroff at Naroff Economic Advisors.
"This is a strong report that may simply indicate that the sour mood consumers seem to be telling surveyors that they are in hasn't stopped them from coming back to the malls," he added.
Naroff said the data "should provide some hope that households are beginning to play their part in the economic recovery. That should buoy investor confidence."
The data also suggested the auto sector is on the mend after volatility related to the "cash for clunkers" trade-in incentives. The program ended in August and resulted in a drop in sales in September, but the market has rebounded over the past two months.
"It is a good and solid report for sales," said Robert Brusca at FAO Economics.
General merchandise sales gained 0.8 percent and building materials increased 1.5 percent. But home furnishings and apparel sales fell 0.7 percent.
Food and beverage sales were up 1.0 percent.
"The strength was evident across a wide range of retail segments," said Scott Hoyt at Moody's Economy.com.
"Spending is also being supported by fewer layoffs, small increases in wage income, and higher stock prices. Nonetheless, it remains unclear how sustainable the growth is. Much of the spending still seems to be driven by discounting and with leveraging ongoing, consumers still have very limited access to cash."
The report also revised down October retail sales data, but this still showed a healthy 1.1 percent rise instead of 1.4 percent.
Copyright 2009 AFP American Edition
