American consumers increased their
purchases of clothing, accessories and furniture in October and
were more confident this month, suggesting job gains may help the
holiday shopping season.
Retail sales increased 0.2 percent after a 1.6 percent rise,
the Commerce Department said in Washington. Purchases excluding
automobiles rose 0.9 percent, the biggest jump since May, after a
0.8 percent September gain that was more than first estimated.
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“With job growth picking up and wage and salary gains
accelerating, all the pieces are in place for the consumer to
keep spending,” said Tim McGee, chief economist at U.S. Trust
Corp. in New York. “It looks really good.”
Consumer confidence improved in a University of Michigan
survey, rising to 95.5 this month from 91.7 in October. A report
this month showed the country added the most jobs since March in
October and gasoline prices fell last week to $2.05 a gallon, the
cheapest in a month. With more money to spend and less concern
about energy bills, consumers may help drive the economy this
quarter. Some economists raised growth forecasts Friday.
“Consumer confidence appears to be pretty solid,” said
Jeff Lind, director of the Nebraska Furniture Mart store in
Kansas City, Kan. Nebraska Furniture Mart, a unit of
billionaire Warren Buffett’s Berkshire Hathaway Inc., has other
stores in Omaha, Neb., and the outskirts of Des Moines, Iowa.
After the report, economists at Morgan Stanley raised their
fourth-quarter consumer spending forecast to 3.3 percent, a
percentage point higher than their previous estimate. They
forecast a 3.9 percent pace of economic growth in the fourth
quarter. Citigroup Global Markets Inc. increased its growth
estimate for the final quarter to 3.3 percent from 3.1 percent.
The Federal Reserve raised its benchmark interest rate one-quarter point to 2 percent on Nov. 10 and said the labor market
improved and the economy is showing “moderate” growth. Another
rate increase may be in store next month, and the benchmark 10-year Treasury note headed for its third straight weekly decline.
“Policy-makers continued to see economic conditions as
likely to warrant a further reduction in policy accommodation in
coming quarters,” minutes released Friday from the Fed’s policy
meeting on Sept. 21 said. Still, “policy actions would need to
be increasingly keyed to incoming data.”
Sales at clothing and accessory stores jumped 3 percent, the
biggest increase in two years, after a 1 percent increase. Retail
sales account for almost half of all consumer spending, which in
turn accounts for about two-thirds of the economy.
Sales at general merchandise stores, which include
department stores, rose 0.9 percent last month after rising 1.3
percent in September. Sales at department stores rose 0.5 percent
after rising 1 percent.
Target Corp., the No. 2 discount retailer in the U.S.,
reported Thursday that sales at Target stores open at least a
year rose 4.5 percent in the third quarter, which ended last
month. The Minneapolis-based company is second only to Wal-Mart
Stores Inc., and its customers typically have higher incomes.
“There continues to be a significant dichotomy between
purchases by high-income households and low-income households
that are more affected by higher energy costs,” said Lynn
Reaser, chief economist at Banc of America Capital Management.
“While consumer spending is still showing reasonable growth, we
are looking for some moderation in the fourth quarter.”
Stores that sell building materials and garden supplies had a
1.1 percent drop in sales last month, the biggest decline since
May, after a 1.1 percent increase in September.
Sales at automobile dealerships and parts stores dropped 2.2
percent last month after rising 4.3 percent. Cars and light
trucks were sold at an annual rate of 17 million vehicles in
October, down 2.9 percent from September, according to industry
figures released earlier this month. Auto sales last quarter were
the strongest in a year.
Twenty-two percent of shoppers polled earlier this month
said they would spend less than they previously thought during
the holidays due to the cost of gasoline, up from 12 percent in
September, said Britt Beemer, chairman of Americas Research
Group, a market research firm in Charleston, S.C., in
an interview Nov. 10.
