Retail sales were stronger than expected in November as consumers stepped up despite the shadow of high unemployment, while producer prices rose, offering further evidence the economic recovery gathered steam in the fourth quarter.
The Commerce Department said on Tuesday total retail sales increased 0.8 percent, advancing for a fifth straight month, as consumers snapped up clothing and other items at the start of the holiday season and receipts at gasoline stations surged.
Sales for October were revised up to 1.7 percent from a previously reported 1.2 percent gain. Economists polled by Reuters had expected retail sales to increase 0.6 percent last month. Compared to November last year sales were up 7.7 percent.
Separately, producer prices increased 0.8 percent last month, the Labor Department said, above forecasts for a 0.6 percent gain. Core wholesale prices, which exclude volatile food and energy prices, rose 0.3 percent.
Based on this (retail sales) report we have upwardly revised our Q4 personal consumer spending numbers. ... The hand-off to 2011 looks very promising, said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York.
U.S. stock index futures slightly added to gains after the data. U.S. government debt prices extended losses, while the dollar pared losses against the yen.
Excluding autos, sales rose 1.2 percent last month, the largest gain since March and exceeding economists' expectations for a 0.6 percent gain. Sales excluding autos increased 0.8 percent in October.
The data was the latest to imply an acceleration in economic growth during the current quarter after output expanded at a 2.5 percent annual pace in the July-September period.
However, it will probably not be strong enough to discourage the Federal Reserve from completing its $600 billion government debt buying program intended push already low interest rates further down and stimulate demand.
Policymakers from the U.S. central bank meet on Tuesday to assess the economy and are widely expected to stay the course of accommodative monetary policy.
Sales last month were buoyed by a 2.7 percent rise in receipts at clothing and clothing accessories stores, the largest increase since March.
Consumers also spent on non-essential goods, lifting sales at sporting goods, hobby, book and music stores 2.3 percent, the biggest gain in almost a year.
Sales were also boosted by a 4 percent jump in receipts at gasoline stations, which was the largest gain in a year. But motor vehicle sales surprisingly fell 0.8 percent, while building materials dipped 0.1 percent after rising 3.3 percent in October.
Core retail sales, which exclude autos, gasoline and building materials, rose 0.9 percent after a 0.5 percent gain in October.
Core sales correspond most closely with the consumer spending component of the government's gross domestic product report. Spending, which accounts for 70 percent of U.S. economic activity, increased at a 2.8 percent annual rate in the third quarter.
But there were some weak spots in the retail sales report. Purchases at electronics and appliance stores fell 0.6 percent last month and furniture sales declined 0.5 percent.
Top consumer electronics chain Best Buy Co Inc reported a decline in quarterly results and same-store sales and cut its full-year outlook, citing weak demand in its key U.S. market.
(Reporting by Lucia Mutikani; Editing by Neil Stempleman)