US retail sales rise less than expected in November

US retail sales rise less than expected in November

A shopper wears a Santa Claus hat at the King of Prussia Mall, United States' largest retail s
FILE PHOTO: A shopper wears a Santa Claus hat at the King of Prussia Mall, United States' largest retail shopping space, in King of Prussia, Pennsylvania, U.S., December 8, 2018. REUTERS/Mark Makela

WASHINGTON: US retail sales increased less than expected in November as Americans cut back on discretionary spending, which could see economists dialing back economic growth forecasts for the fourth quarter.

The Commerce Department said on Friday (Dec 13) retail sales rose 0.2 per cent last month. Data for October was revised up to show retail sales increasing 0.4 per cent instead of gaining 0.3 per cent as previously reported.

Economists polled by Reuters had forecast retail sales would accelerate 0.5 per cent in November. Compared to November last year, retail sales increased 3.3 per cent.

Excluding automobiles, gasoline, building materials and food services, retail sales edged up 0.1 per cent last month after rising by an unrevised 0.3 per cent in October.

The so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Consumer spending, which accounts for more than two-thirds of US economic activity, grew at a 2.9 per cent annualized rate in the third quarter.

The economy expanded at a 2.1 per cent pace in the July-September period. Last month's small increase in core retail sales could see economists lower their GDP growth estimates for the fourth quarter, which are currently converging around a rate of 1.8 per cent.

The report bucked a recent raft of fairly upbeat economic data on the labour market, housing, trade and manufacturing that had suggested the economy was growing at a moderate speed despite headwinds from trade tensions and slowing global growth.

The Federal Reserve on Wednesday kept interest rates steady and signalled that borrowing costs were likely to remain unchanged at least through next year amid expectations the economy would continue to grow modestly and the unemployment rate remains low.

The government reported last week that the economy created 266,000 jobs in November and the unemployment rate fell back to 3.5 per cent, its lowest level in nearly half a century.

Last month, auto sales increased 0.5 per cent after rising 1.0 per cent in October. Higher gasoline prices lifted receipts at service stations by 0.7 per cent. Online and mail-order retail sales increased 0.8 per cent after gaining 0.6 per cent in October.

Sales at electronics and appliance stores were up 0.7 per cent. Receipts at building material stores were unchanged and sales at clothing stores fell 0.6 per cent. Spending at furniture stores edged up 0.1 per cent.

Americans cut back on spending at restaurants and bars, with sales falling 0.3 per cent. Spending at hobby, musical instrument and book stores dropped 0.5 per cent.

Source: Reuters