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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Paul Kern who wrote (89576)	12/13/2007 8:59:01 AM
From: Paul Kern	Respond to of 110194

U.S. November Retail Sales Rise More Than Forecast (Update2) By Joe Richter Dec. 13 (Bloomberg) -- Retail sales in the U.S. increased twice as much as forecast in November, easing concern near- record fuel prices and falling home values would trip up consumers. The 1.2 percent increase, the biggest since May, followed a 0.2 percent gain the prior month, the Commerce Department said today in Washington. Purchases excluding automobiles jumped 1.8 percent, the most since January 2006. More jobs and higher incomes may cushion the damage from $3-a-gallon gasoline and declining home prices, preventing a collapse in demand, economists said. The increase bears out the Federal Reserve's decision this week to reduce the benchmark interest rate by just a quarter point. Policy makers took additional steps yesterday to spur bank lending. ``The numbers should help put to rest some of the fears of the economy sliding into recession,'' said Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina. ``This validates not just the quarter-point move by the Fed, but the stance that the Fed has taken. Treasury notes fell after the report, which was published the same time as Labor Department figures showing prices paid to U.S. producers climbed 3.2 percent in November. Stock-index futures pared their decline, while the dollar remained higher against the euro. Exceeding Estimates Sales were expected to rise 0.6 percent, based on the median forecast of 80 economists surveyed by Bloomberg News. Estimates ranged from a decline of 0.2 percent to a gain of 1.2 percent. Sales excluding automobiles were forecast to increase 0.6 percent from the prior month, according to the survey median. The increases was paced by a 6.8 percent jump in receipts at service stations, the biggest since September 2005, that may reflect the jump in gasoline prices. Americans still had plenty of cash left over as sales excluding gasoline rose 0.6 percent after a 0.1 percent drop in October. Purchases at furniture, electronics, building material, and department stores all registered gains. Only auto dealers and a category called miscellaneous store retailers declined in November sales. Excluding autos, gasoline and building materials, the figures the government uses to calculate gross domestic product, sales rose 1.1 percent, following a 0.2 percent gain the month before. The government uses data from other sources to calculate the contribution from the three categories excluded. Job Creation Employers hired more workers than forecast in November and hourly wages rose more than projected, the Labor Department reported last week. The figures suggested job growth remains one of the few bright spots in the economy. Bentonville, Arkansas-based Wal-Mart Stores Inc., the world's largest retailer, said November sales rose within the company's forecast as shoppers stocked up on holiday food and gifts. Wal-Mart increased post-Thanksgiving discounts to lure shoppers burdened by higher gasoline and food costs. The latest readings suggest that consumers may be taking a breather in early December following last month's binge. Retail sales dropped for the second straight week as consumers postponed holiday gift purchases. Sales fell 2.7 percent in the seven days through Dec. 8, following a 4.4 percent decline a week earlier, Chicago-based research firm ShopperTrak RCT Corp. said yesterday. Holiday Sales The National Retail Federation has predicted the smallest holiday sales gain in five years. United Airlines Inc., Delta Air Lines Inc., Continental Airlines Inc. and Southwest Airlines Co. have cut 2008 U.S. capacity plans amid growing concern over rising oil prices and a weakening economy. ``We are concerned about growing evidence of slowing economic growth that would inevitably affect passenger demand, coupled with a surge in energy prices,'' Southwest Chief Executive Officer Gary Kelly said in a statement on Dec. 4. The Fed, European Central Bank and three other central banks yesterday moved to alleviate a credit squeeze that's threatening growth. The banks took the action after interest- rate cuts in the U.S., U.K. and Canada failed to allay concerns that banks will rein in lending, sending the U.S. into recession. ``Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending,'' the Fed said Dec. 11 in announcing the rate reduction. Today's sales report may prompt economists to raise fourth- quarter growth estimates. The economy will grow 1 percent from October to December, a fifth the pace of the previous three months, according to the median estimate of economists surveyed by Bloomberg News earlier this month. To contact the reporter on this story: Joe Richter in Washington Jrichter1@bloomberg.net Last Updated: December 13, 2007 08:53 EST