US retail sales growth weak in November

 
City A.M. Reporter
US retail sales grew less than forecast in November, tempering some of the expectations for a strong holiday season that had been raised by signs of bumper Thanksgiving weekend sales.

Total retail sales increased 0.2 per cent after rising by an upwardly revised 0.6 per cent in October, as less spending on food and beverages weighed against stronger auto sales, the Commerce Department has said.

"It's fairly disappointing given that all the evidence was pointing to fairly strong gains during the month," said Millan Mulraine a macro strategist at TD Securities in New York.

Shoppers swarmed in to stores over the Thanksgiving weekend, traditionally retail's biggest sales period. Positive sales reports over that weekend led some analysts to predict a strong overall season.

However, many economists have warned the shopping frenzy may not carry through the holidays due to the nation's still high unemployment rate of 8.6 per cent.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose sharply in the third quarter but November's retail sales growth was the weakest in any month since June.

Americans have scaled back on saving this year, freeing up money for spending, but economists say that trend was not sustainable.

"November's modest rise could therefore be the start of a period in which households start to spend more within their means," said Paul Dales, an economist with Capital Economics in London.

Still, some of the weakness in retail sales was likely due to heavy discounting, Mulraine said.

One retailer that felt the pinch from heavy discounts was Best Buy, the world's largest electronics chain. The firm reported a fall in third-quarter profits. Its shares dropped more than 10 per cent.