Filed by KOSU News in Business.
December 11, 2009

The holiday season may be brighter for U.S. businesses as encouraging reports on retail sales, business inventories, and consumer sentiment boosted hopes Friday that the economy is rebounding.

Despite reports from retailers that sales were sluggish going into the holiday shopping season, the Commerce Department reported that retail sales rose 1.3 percent in November — up from a revised 1.1 percent in October and much higher than economists had predicted.

“It’s a surprisingly good performance given the rather lackluster reports from retailers about holiday spending, so far,” said Nigel Gault, chief economist at IHS Global Insight. “This is good news.”

Meanwhile, businesses also increased their inventories 0.2 percent in October, ending a string 13 straight declines, a separate Commerce Department report said. Economists had expected another drop in inventories, so the unexpected news prompted speculation that businesses may be restocking their shelves in anticipation of improved sales.

Total business sales rose 1.1 percent, the fifth straight gain.

Electronics Sales Jump

November’s retail sales report includes crucial figures from Black Friday, the day after Thanksgiving and the kick-off for the holiday Christmas shopping season. Black Friday is traditionally one of the biggest shopping days of the year, with big retailers — including Wal-Mart, Target and Best Buy — luring shoppers into the stores as early as 5 a.m. with discounts on electronics, winter clothing and toys.

The November sales figures were influenced by strong car purchases and higher gasoline prices, but even without those figures sales were up 0.6 percent, Gault said. Sales of electronics were particularly strong — jumping 2.8 percent, the largest increase since January. Furniture and clothing sales were down for the month.

“This is the critical time of the year for retailers, and they certainly got off to a pretty good start in November,” said David Resler, chief economist with Nomura Securities International.

Consumers Boost Spending

With unemployment at 10 percent, retailers fear Americans will be afraid to spend, leading to concern that critical holiday sales would be bleak and the economic recovery would falter.

But the Reuters/University of Michigan consumer sentiment index showed that consumer sentiment was on the rise in early December — jumping from 67.4 in November to 73.4. The improved moved mood may indicate that shoppers will keep spending throughout the holidays.

Meanwhile, a Chinese trade report showed exports from that nation picked up last month — providing further evidence that the global economy is on the upswing.

“Smaller trade deficit, some signs that inventories are being rebuilt, and now a better-than-expected retail report. All the news is in the same direction, suggesting that the economy is expanding a bit faster than we thought,” said Gault. Copyright 2009 National Public Radio