U.S. retail sales powered higher again last month, Commerce Department data indicated Wednesday, following record spending over the Thanksgiving that suggests solid consumer strength into the final months of the year.
Headline sales rose 0.7% in November to a collective tally of $724.6 billion, the Commerce Department said, well ahead of Wall Street's consensus forecast of a 0.5% gain. The October reading was revised higher, to a final gain of 0.5%.
The closely tracked control group number, which excludes autos, building materials, office supplies, gas-station sales and tobacco, and feeds into the government's GDP calculations, rose 0.4% on the month, matching the Wall Street consensus forecast and October's decline of 0.1%.
“American retail spending continues to grow at a healthy clip, signaling consumer confidence as we head into the holiday season," said Elizabeth Renter, senior economist at NerdWallet. "Spending on autos and nonstore (online) retailers grew most robustly in November."
"Healthy retail spending plays a pretty significant role in a growing economy, and consumer spending overall has been credited with keeping the U.S. economy strong in recent months and years," she added.
U.S. stocks were little-changed following the data release, as traders bet that the solid spending tally could further pare bets on 2025 rates cuts from the Federal Reserve.
Futures contracts tied to the S&P 500 suggest a 16 point opening bell decline while those linked to the Dow Jones Industrial Average are called 140 points lower. The tech-focused Nasdaq is priced for a 35 point pullback.
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Benchmark 10-year Treasury note yields were little changed at 4.415% following the data release, while 2-year notes were up 2 basis points to 4.264%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.04% higher at 106.901.
"While a beat on retail sales is always welcomed, doing so in the critical holiday season is always an encouraging sign for US retailers and the economy," said Bret Kenwell, U.S. investment analyst at eToro. "Investors want to see that consumers are confident, and part of that confidence comes from consumers’ willingness to spend their money, particularly on discretionary items. That said, not all consumer spending was equal."
"Moving forward, consumers and investors expect another 25 basis point rate cut later this week from the Fed," he added. "Alongside this week’s final Q3 GDP reading and PCE report, we should have a pretty clear picture of how the US economy looks as investors shift their focus to 2025."
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The CME Group's FedWatch suggests the odds of a December cut are holding at 97%, although bets on follow-on cuts into 2025 have pared to just two.
Last week, the Commerce Department said its headline Consumer Price Index for November was pegged at an annual rate of 2.7%, accelerating from the 2.6% pace recorded in October and reaching the highest level since July.
So-called core inflation, which strips out volatile components like food and energy, held at an annual rate of 3.3%, matching Wall Street's forecast and pegged at the lowest rate in more three years.
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