November is typically a huge shopping month, with Thanksgiving and Black Friday kicking off the busy holiday retail season. But thanks to cheap fuel and wages that are finally starting to pick up, the retail sector was especially strong last month.
Retail sales rose 0.7 percent in November – their biggest monthly gain in eight months , according to data released Thursday by the Commerce Department. Economist had been expecting a gain of about 0.4 percent. October sales were also revised upward to 0.5 percent. Excluding auto sales, which led the charge with a 1.7 percent November gain, so-called “core” sales were up 0.5 percent.
For the year, retail sales were up 5.1 percent since November 2013.
The strong monthly report continued a trend of robust retail growth heading into the end of the year. “The average October/November level of seasonally adjusted total retail sales is 1.02 percent above the Q3 average, indicating that overall consumer spending on goods has grown at a very solid pace in the first two months of Q4,” MFR Inc. economist Joshua Shapiro wrote in an e-mailed analysis.
Consumers have plenty of reasons to feel good about spending more. The labor market continues to improve: The economy added another 321,000 jobs last month, and the number of workers filing for unemployment benefits fell last week. Wages, which have been stagnant through most of the jobs recovery, are finally starting to rise. Also helping matters: cheap fuel. Gas prices are nearing the $2 per gallon mark in some parts of the country, meaning shoppers have a little more wiggle room for other purchases.
“The upturn in sales supports survey evidence that the economy’s recent growth surge is showing few signs of stalling, despite a gloomier-looking global economy,” Markit Economist Chris Williamson wrote in an e-mailed analysis. “We expect, however, that the upturn is cooling compared to the heady rates of expansion seen in the summer.”
The November strength in retail sales came in spite of a relatively weak Black Friday weekend. Sales on Thanksgiving through the following Sunday were down 11 percent from last year, according to the National Retail Federation. Still, analysts think the sag actually may portend good things for the holiday shopping season overall.
“We expect real consumer spending growth in the fourth quarter to be north of 3 percent, and holiday retail sales growth this year is expected to be significantly stronger than 2013 and 2012,” IHS Global Insight economists Patrick Newport and Stephanie Karol wrote in an e-mailed report. “The real mover and shaker on the retail sales front is online sales. We expect online holiday sales to be more than 14 percent of total holiday retail sales this year.
They add: "Looking ahead, we expect real consumer spending growth in 2015 to outpace 2014 due to lower gasoline prices, stronger real disposable income growth, and elevated levels of consumer confidence.”