Consumers showed increased spending at retail stores in November, boosting the economy during the early stages of the winter holiday shopping season. According to the Commerce Department, retail sales saw a 0.7% rise last month, surpassing October's 0.5% increase. Notably, sales at auto dealers surged by 2.6%, largely driving the overall gain. This spike in demand may have been influenced by the need for new cars in hurricane-affected areas and attractive incentives offered by dealers.
The uptick in spending indicates that the economy continues to grow steadily despite higher interest rates. This trend could potentially lead the Federal Reserve to adjust borrowing costs more cautiously next year. While sales at grocery stores, clothing shops, and restaurants declined, other sectors saw modest gains apart from car dealers and online retailers.
Economists anticipate a decent holiday sales season for retailers, with the economy expanding at nearly a 3% annual pace in the third quarter. Although hiring has slowed down, the unemployment rate remains low at 4.2%, and paychecks are growing at a solid 4% pace nationwide.
Various retail sectors experienced mixed results, with furniture, electronics, and home and garden supplies stores reporting modest sales increases. Online retailers witnessed a notable 1.8% jump in sales, while spending at restaurants and bars decreased by 0.4%. The upcoming Fed rate decision is expected to include a third rate cut this year, with projections for further reductions in 2020.
Retailers are gearing up for the holiday season by offering deals and incentives to attract shoppers. Despite challenges such as fewer days between Thanksgiving and Christmas and distractions from the presidential election, analysts foresee a strong holiday shopping period. Online sales during 'cyber week' showed an 8.2% increase from the previous year, with overall holiday season sales expected to rise by 8.4% compared to last year.
As the holiday shopping frenzy continues, retailers are optimistic about the upcoming busy shopping days. With significant discounts and promotions in place, stores are aiming to make up for any previous losses and capitalize on the remaining holiday retail traffic.
