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Retail sales rise 0.4 percent with big gain for furnishings
WASHINGTON -- Energized shoppers pushed sales at the nation's retailers up by 0.4 percent in November, the best showing in three months. Sales of furniture and home furnishings posted the biggest gain in nearly two years.
The solid advance came after retail sales fell by 1.5 percent in September and edged up by just 0.1 percent in October, the Commerce Department reported Thursday.
November's sales increase was the largest since August and matched analysts' expectations.
Excluding automobile sales, which can swing widely from month to month, retail sales rose by 0.5 percent in November, a stronger performance than the 0.2 percent rise economists were forecasting.
Thursday's report reinforced the belief among economists that consumers -- the lifeblood of the economy -- will continue to spend at a sufficient pace to prevent the economy from sliding into a new recession.
"Good retail sales are America's Christmas gift to itself," Commerce Secretary Don Evans said of November's retail sales performance.
Low interest rates, tax cuts and extra cash from a flurry of home mortgage refinancing activity have supported consumer spending, helping to offset potentially negative forces such as rising unemployment and the turbulent stock market.
Tracy Mullin, president of the National Retail Federation, also was encouraged by November's retail sales report and predicted holiday sales would be around 4 percent higher this year than last year.
On Wall Street, stocks edged up. The Dow Jones industrial average rose 5 points and the Nasdaq was up 10 points in morning trading.
In another report, new claims for unemployment benefits jumped last week by a seasonally adjusted 83,000 to 441,000, the highest level since the week ending April 13, the Labor Department said. But analysts believe the increase was exaggerated by seasonal adjustment problems.
The Federal Reserve, keeping an eye on the uneven economic recovery, decided Tuesday to hold a key interest rate at a 41-year low of 1.25 percent.
Economists believe the Fed probably will leave interest rates at that low level through the winter and possibly the spring, good news for borrowers looking to finance big-ticket purchases.
Leaving borrowing costs low might motivate consumers to keep spending and might encourage businesses to increase investment.
That would provide a helping hand to an economy that analysts believe will grow tepidly this quarter and in the first quarter of 2003 but will not slide into a new recession.
While consumers have been keeping the economy going all year, businesses have been stuck in a funk.
Worried about a possible war with Iraq, the stock market and battered profits, companies have been reluctant to make big commitments in hiring and capital investment, forces restraining the recovery.
Separately, the deficit in the broadest measure of trade narrowed in the third quarter to $127 billion, compared with a $127.6 billion shortfall in the second quarter, the Commerce Department said in another report.
The current account deficit is considered the best measurement of a country's international economic standing because it measures not just the goods and services reflected in the government's monthly trade reports, but also investment flows between countries and unilateral transfers, including U.S. foreign aid payments.
In the retail report, sales of furniture and home furnishings jumped by 2.3 percent in November, an outgrowth of a housing market that is on track to post record sales this year. The 2.3 percent increase was the largest since January 2001 and came after a 0.2 percent rise in October.
Similarly, sales of building materials rose 1.2 percent in November, up from a tiny 0.1 percent advance in October.
At electronics and appliances stores, sales went up 0.9 percent, on top of a 1 percent increase. Food and beverage sales rose 0.9 percent in November, up from a 0.1 percent gain. Sales at health and beauty stores increased 0.3 percent, following a 0.2 percent advance.
Automobile sales dipped by just 0.1 percent in November, an improvement from October's sharper 2.1 percent drop. Auto makers and dealers have been offering incentives to bolster sales.
At bars and restaurants, sales rose 0.3 percent last month, a turnaround from the 0.5 percent decline in October.
Sales at general merchandise stores, including department stores, increased 0.3 percent in November, down from a 1.2 percent gain.
There were a few weak spots: Clothing sales dropped by 1.3 percent in November, following October's brisk 5.5 percent rise. Sales at sporting goods, hobby and book stores fell 0.5 percent, after a 0.1 percent decline.