Ahead of the Bell: US Retail Sales
WASHINGTON (AP) — Americans likely spent more in November at retail businesses, reflecting the start of the holiday shopping season and a rebound in the Northeast after Superstorm Sandy.
Economists forecast that retail sales rose 0.4 percent last month, according to a survey by FactSet. The Commerce Department will release the report at 8:30 a.m. EST Thursday.
In October, retail sales dropped 0.3 percent, led by a big decline in auto sales. That largely reflected storm disruptions that slowed business in 24 states.
Automakers are reporting better sales last month, in part because people have begun replacing vehicles that were damaged in the storm. Some of the increase also reflects pent up demand from the days when dealers couldn't sell cars after Sandy made landfall on Oct. 29.
Sales at hardware and home improvement stores in the Northeast are also expected to show gains because many people have started to repair damaged homes.
The gains in autos and building supplies should offset lower sales at gasoline service stations, which would reflect falling pump prices.
Still, economists worry that consumers might scale back on holiday shopping if they are concerned about the "fiscal cliff." That's the name for tax hikes and spending cuts that are scheduled to go into effect next year if Congress and President Barack Obama cannot reach a deal to avert them.
The retail sales report is the government's first look at consumer spending. Consumer spending is important because it drives nearly 70 percent of economic activity.
The economy grew at a solid 2.7 percent annual rate in the July-September quarter. But the gains were mostly because businesses stepped up restocking, which drove more factory production.
Consumer spending actually slowed over the summer from the previous quarter. And many economists worry that consumers have remained cautious in the final three months of the year, because of the storm and their fears about higher taxes next year. That should keep growth below an annual rate of 2 percent in the October-December quarter, they say.
The economy is expected to get a boost from the storm in November, most notably in car sales.
While it was estimated that the storm lowered car sales by about 30,000 in October, AutoData reported that car sales rose 15 percent in November from a year earlier to 1.1 million. That was the fastest pace since January 2008. U.S. sales would reach 15.5 million this year if they stayed at November's rate. That is far higher than the 14.3 million rate in the first 10 months of the year.
A report from MasterCard's Advisors'SpendingPulse, a retail data service, estimated that Sandy had cut retail spending by about 20 percent in the last week in October in the Northeast. That region accounts for about 24 percent of retail sales nationwide.
Shoppers may have made up for some of those storm disruptions in doing their holiday shopping. It is estimated that shoppers hit stores and websites in record numbers over the Thanksgiving weekend, according to a survey released by the National Retail Federation. Consumers were attracted by various efforts to make shopping easier from opening stores on Thanksgiving evening to expanding shipping and layaway options.
A better job market could also help lift retail sales. The Labor Department reported last week that employers added 146,000 jobs in November and the unemployment rate dipped to 7.7 percent, a four-year low. While still modest, the job growth was encouraging because it defied disruptions from Sandy and employers' concerns about the fiscal cliff.