Washington, DC, Dec. 12--Shoppers pushed sales at the nation's retailers up by 0.4% in November, the best showing in three months. Sales of furniture and home furnishings led the way, posting their biggest gain in nearly two years. The solid advance came after retail sales fell by 1.5% in September and edged up by just 0.1% in October, according to the Commerce Department.
November's sales increase was the largest since August and matched analysts' expectations.
Overall retail sales, excluding automobile sales which can swing widely from month to month, rose by 0.5% in November, a stronger performance than the 0.2% rise economists were forecasting.
The report reinforced the belief among economists that consumers will continue to spend at a sufficient pace to prevent the economy from sliding into a new recession.
Low interest rates and extra cash from a flurry of home mortgage refinancing activity and tax cuts have supported consumer spending, helping to offset potentially negative forces such as rising unemployment and the turbulent stock market.
In a second report from the Commerce Department, the deficit in the broadest measure of trade narrowed in the third quarter to $127 billion from a $127.6 billion shortfall in the second quarter.
The latest snapshot of trade activity showed that the current account deficit was smaller in the third quarter than the $133.6 billion imbalance analysts were predicting.
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.
At its last meeting of the year, the Federal Reserve held a key interest rate at a 41 year low of 1.25%.
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, giving 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 struggling. 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.
In the retail report, sales of furniture and home furnishings jumped by 2.3% in November, an outgrowth of a housing market that is on track to post record sales this year. The 2.3% increase was the largest since January 2001 and came after a 0.2% rise in October. Similarly, sales of building materials rose 1.2% in November, up from a tiny 0.1% advance in October.
At electronics and appliances stores, sales went up 0.9%, on top of a 1% increase. Food and beverage sales rose 0.9% in November, up from a 0.1% gain. Sales at health and beauty stores increased 0.3%, following a 0.2% advance.
Automobile sales dipped by just 0.1% in November, an improvement from October's sharper 2.1% drop. Auto makers and dealers have been offering incentives to bolster sales.
At bars and restaurants, sales rose 0.3% last month, a turnaround from the 0.5% decline in October. Sales at general merchandise stores, including department stores, increased 0.3% in November, down from a 1.2% gain.
There were a few weak spots: clothing sales dropped by 1.3% in November, following October's brisk 5.5% rise. Sales at sporting goods, hobby and book stores fell 0.5% after a 0.1% decline.
