Despite initial reports from many retailers that the start to the holiday season has been relatively sluggish, the Commerce Department reported Friday (December 11) morning that retail sales climbed by 1.3 per cent in November. This follows a 1.1 per cent boost in retail performance during October.

Consumer spending accounts for about 70 per cent of the US economy, so it is obvious why government officials, analysts and retailers are counting on solid retail growth to reinforce the notion that the economy is getting its footing again.

November’s strong showing was the best since the 2.4 per cent gains that were posted in August. Economists had widely expected just a .6 per cent gain in November, relying on reports from a wide range of retailers that suggested they were not going to deliver the post-Thanksgiving sales numbers many were hoping for.

Slight gains in auto sales and a 6 per cent growth in service station sales helped products the solid sales growth for November. Higher gasoline prices generated much of the improvement for service stations.

Still, you cannot just point to those areas as excluding auto and gasoline sales, more typical retail stores generated a .8 per cent jump in November sales. So apparently, despite more gloomy reactions by retailers, the numbers help substantiate that consumers are more comfortable than anticipated buying gifts this holiday season.

Department store sales climbed by .7 per cent and big retailer sales, including Wal-mart and Target, grew by .8 per cent. Popular gift categories seemed hot as electronics and appliance retailers were up 2.8 per cent for November. Hardware store sales grew by 1.5 per cent. Furniture store sales were the only negative surprise as sales in this category fell by .7 per cent.

Many analysts were concerned that nearly 10 per cent unemployment would make it impossible for consumer spending to keep up with past year’s numbers. Consumers appear more confident in what is to come than they are worried about what is reality in the here and now.

December sales will be closely watched as Americans are still deeply involved in the holiday buying season. Many mailing and shipping companies are reporting huge amounts of packages this year as more and more consumers are turning to online retailers like Amazon and EBAY as opposed to venturing out to stores to buy.

Neil Kokemuller
10:20 AM EST
Friday, December 11, 2009

Neil Kokemuller is an Associate Professor of Marketing at Des Moines Area Community College in Des Moines, Iowa, USA. He has a MBA from Iowa State University. He is also in house stock market commentator at Live Charts UK, where you can find real time charts and share prices.

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