Retail sales were much stronger than expected in November, rising by 1.3% M/M, following a 1.1% M/M gain in the prior month.

- Excluding autos, sales were up an equally strong
- 1.2% M/M, while core retail sale rose by a more modest 0.6% M/M.
- This was a surprisingly strong report, and suggests
- that U.S. consumers are slowly regaining their spending mojo.

U.S. consumer spending surged by a strong 1.3% M/M in November, following the 1.1% M/M (previously reported as +1.4% M/M) gain the month before. The advance in sales was well ahead of the market consensus for a more modest 0.6% M/M gain and was the fifth monthly gain in this index in seven months. Excluding autos, sales were up an equally strong 1.2% M/M, while core retail sales, which exclude autos and gas purchases rose for the fourth straight month, rising by 0.6% M/M, suggesting strong momentum for core consumer spending. On a year ago basis, retail sale are now in positive territory, rising by 1.9% Y/Y.

The details of the report were quite strong. There were big gains in spending on gasoline (up 6.0% M/M), electronics (up 2.8% M/M) and motor vehicles (up 1.6% M/M). Sales of building material (up 1.5% M.M) food and beverages (up 1.0% M/M) and general merchandise (up 0.8% M/M, with department store sales rose 0.7% M/M) were also quite good. There were modest declines in spending on furniture (down 0.7% M/M) and on clothing (down 0.7% M/M). This was a remarkably strong report, and it suggests that the positive momentum seen in U.S. consumer spending in recent months is gaining steam. And with consumer spending continuing to be the lynch-pin of U.S. economic activity, we expect personal expenditures to provide a significant boost to U.S. GDP growth this quarter. Notwithstanding, with the U.S. labour market remaining weak, despite the impressive improvements in recent months, and the initial stages of the economic recovery expected to be quite modest, we expect the uptick in consumer spending to perhaps ease in the coming months.