U.S. retail sales rose last month as increased buying of building materials due to Hurricane Sandy and strong auto sales offset flagging consumer spending and cheaper gasoline, according to economists' forecasts.
The U.S. Commerce Department, which reports preliminary November national retail sales on Thursday, is expected to report that retail sales climbed by 0.5 percent to 1 percent.
Robust auto sales last month possibly added 0.9 percentage points, according to Capital Economics. Meanwhile, storm-related spending by consumers in the Northeast likely caused buying on building materials to grow after shrinking in October. Declining gasoline prices put more money in the wallets of consumers, in effect trimming the month's retail spending.
Analysts polled by Thomson Reuters weren’t as optimistic about the overall expected gain. They anticipate total retail sales to have grown 0.5 percent in November. Excluding autos, gasoline and building materials, the estimated growth was pegged at 0.4 percent, up from October’s 0.1 percent retreat, which was the first decline in three months.
Auto purchases probably rose on incentive spending plus the fact that the average age of vehicles on the road entered the year at a record high. Automakers led by Toyota Motor Sales, U.S.A., Inc. (NYSE: TM) and Honda Motor Co. Ltd. (TYO: 7267) saw single- to double-digit sales growth last month, which contributed to overall retail sales.
Hurricane Sandy may have cost the densely populated Northeast about $50 billion in damages, so sales of building materials that declined nearly 2 percent in October likely rose in November as consumers in the storm-ravaged region repair damages.
“Spending on rebuilding will filter into growth numbers gradually over a number of quarters," Julia Coronado, chief North America economist at BNP Paribas in New York, recently told Reuters, referring to national gross domestic product. That growth will also boost retail spending in the short term.
Despite a fairly robust holiday shopping season, overall consumer spending – which accounts for about 70 percent of U.S. economic activity -- appears to be faltering over concerns about future tax policy and tepid job creation. The University of Michigan released preliminary December consumer sentiment figures indicating consumers are losing confidence as they head toward the prospect of a higher tax bill by the April 15 filing deadline. Personal income is stagnant and hiring is nowhere near keeping up with demand.
"It was a dramatic drop," Jacob Oubina, senior U.S. economist for RBC Capital Markets, told the Wall Street Journal. "The consumer's not all of a sudden going to pick up the baton."
Angelo Young is a general assignment business reporter who joined IBTimes in April 2012. Much of his career has been behind the scenes as a copy editor, assignment editor and...