Economic boost for US as retail sales rise solidly
US retail sales rose solidly in November, adding to signs of a strengthening economy that could draw the Federal Reserve closer to reducing the pace of monetary stimulus.
The upbeat economic picture was clouded somewhat by another report showing the biggest jump in a year in first-time applications for unemployment benefits last week.
The Commerce Department said retail sales increased 0.7pc last month as Americans bought cars and a range of other goods. November's retail sales increase was the largest in five months and followed a 0.6pc rise in October.
Economists polled by Reuters had forecast retail sales advancing 0.6pc.
"It should provide more confidence to the Fed that the economic recovery has emerged from the political-induced uncertainties of recent months essentially unscathed," said Millan Mulraine, senior economist at TD Securities in New York.
So-called core sales, which strip out automobiles, food services, gasoline and building materials and correspond most closely with the consumer spending component of gross domestic product, rose 0.5pc after gaining 0.7pc in October. That suggested consumer spending would likely step up from a two-year low touched in the third quarter. Spending is being supported by solid employment gains and steady income increases.
But the firming growth tone was tempered somewhat by a separate report from the Labour Department showing initial claims for state unemployment benefits surged 68,000 to a seasonally adjusted 368,000 last week.
That was the largest weekly increase since November 2012.
However, the four-week moving average for new claims, which irons out week-to-week volatility, rose only 6,000, suggesting that a recent strengthening of the jobs market remains intact.
"I would be heavily dismissive of the latest number. It was heavily distorted by the holiday. You had a low-ball number last week and a high one this week. You have to take the two weeks together," said Jacob Oubina, senior economist at RBC Securities in New York. (Reuters)