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November Retail Sales Encouraging

Stocks in this article: AMZNAZOWAGBBYHDGPS

On the other hand, sporting goods and hobby stores saw strong sales, with growth of 2.3% on top of 0.6% growth in October and up 12.3% year over year. Autos, appliances Furniture and sporting goods are all areas where consumers can very easily put off buying if they are worried about the future. The mixed bag of results for the month in these discretionary categories is thus giving no clear signal about the overall tone of the economy.

Sales in the building materials and garden center stores like Home D (HD) were down 0.1% on the month, after rising 3.3% in October and are up 12.3% from a year ago. Given how weak the construction industry has been, up 12.3% from a year ago is a very strong showing. But then again, a year ago things were pretty depressed. It may also be that people are spending more to spruce up their existing place, rather than move into new homes.

The one discretionary area that did show some rebound was in clothing stores like The Gap (GPS), where sales were up 2.7% on top of a 1.2% rise in October. Relative to a year ago they are up 3.5%. A new pair of jeans is a bit less discretionary than a new kitchen table, but more discretionary than going to the grocery store. Colder weather might have also played a role in the strong showing for the month.

Going out to eat and drink is also a very discretionary item, and sales at bars and restaurants were up 0.1%, down from a 0.5% rise in October, and are up 3.9% year over year.

The Take-Away: Encouraging Report

Overall this is a encouraging report, especially considering the sharp upward revisions to last month's numbers. The strength was a bit less broad-based than last month, when eleven of the store types were up and just two down, but still, eight to five is not all bad.

It shows that despite what we have seen in the consumer confidence surveys, that consumers are actually acting much more confidently, and are starting to buy some of the big ticket discretionary type items.

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