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November Retail Sales Encouraging

By Dirk van Dijk of

NEW YORK ( -- Retail Sales were better than expected in November, and the numbers for October were revised sharply higher.

Total retail sales rose 0.8%, much better than the 0.5% consensus expectation, and are up 7.7% from a year ago. October was revised up from 1.2% growth to 1.7% growth, which makes the overall level of retail sales much better than the consensus was expecting (up 0.5%).

The retail sales report is a very broad-based measure of consumer spending. Since consumer spending makes up 71% of the economy, it is a very important number. That overstates things a bit, since retail sales are mostly about the sale of goods, not services, and services make up two thirds of what consumers spend.

Auto Sales Comps a Drag

Auto sales were a bit of a drag on overall retail sales in October, falling 0.8% on the month, but that is after rising 5.6% in September. On a year-over-year basis they were up 12.5%. The hangover from the end the Cash for Clunkers program was mostly over by November of last year, so the year-over-year comparison is cleaner than it was in September or October for the car lots, but there might still be some effect there.

Excluding autos, retail sales rose 1.2%, up from a 0.8% rise in October. The October ex-autos number was revised up from 0.4%. Year over year, sales are up 6.7%. The consensus was looking for a 0.6% rise on the month, excluding autos.

Broad-Based Strength

This report significantly undercuts the "economy is falling into a double-dip recession" theme.

The strength was broad based. The report tracks 13 major categories of stores, eight of which were up and only five down on the month. Year over year, all types of stores are showing increases, ranging from 0.6% (furniture stores) to 14.2% for the non-store retailers like Amazon (AMZN - Get Report)

Excluding the online (and mail-order) retailers, the highest year-over-year growth (13.5%) was in the auto dealers and parts stores, the category that includes the likes of AutoZone (AZO). One has to remember that while the numbers are adjusted for things like the number of selling days in the month, they are not adjusted for prices, and thus give more of a picture of what is happening with nominal GDP than real GDP.
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