Auto sector pumps November retail sales, but holiday season still a question

Consumer spending ticked upward in November, but not enough for economists to predict uniformly that the holiday shopping season will be a robust one this month.

The US Department of Commerce reports that retail and food services sales reached $432 billion in November, a 0.7 increase from the previous month, and 4.7 percent higher than the same month last year.

Although the month-to-month sales increase in November was the largest in five months, the primary drivers of sales were automotive and auto parts retailers, which collectively represented a 1.8 percent spike in sales. Without those sales, the overall retail sales increased just 0.4 percent in November, less than they increased in October.

“The good news is that things are on an uptick, but the bad news is, it’s not much of an uptick, and it’s certainly not something to write home about given historical precedence,” says Clifford Smith, a professor of finance and economics at the Simon Business School at the University of Rochester in New York.

Besides their increased purchases of autos and auto parts, consumers felt freed up in November to spend more on furniture (1.2 percent), electronics and appliances (1.1 percent), and building materials and garden equipment (1.8 percent).

Clothing retailers took the biggest hit last month, with sales falling 0.2 percent. This followed a successful October, where clothing sales surged 2.6 percent.

Online shopping continues to grow; sales via the web increased 2.2 percent in November, the greatest increase since July 2012. The steady presence of mobile communication, via tablets and smartphones, is credited with grooming consumers to shop online, and most industry experts are predicting that online shopping will increase in December.

So far, the numbers are encouraging: The Adobe Digital Index, which examined 180 million visits to 1,000 retail websites, reported that Thanksgiving Day generated about $1.1 billion in online sales, the first time online sales surpassed the $1 billion mark for the day. Likewise, Black Friday sales reached $1.93 billion, a 39 percent increase from last year.

Michael Whitehouse, a senior marketing strategist at OpinionLab, a market research firm in Chicago, said retailers have caught up with consumers in efforts to make the virtual shopping experience seamless, and therefore, desirable.

“We’ve seen a stunning reversal over the course of the last 12 months,” Mr. Whitehouse said in a statement. “Not only has mobile commerce outperformed and taken center stage this year, from a traffic and sales generation standpoint, but brands are now actually nailing that mobile commerce experience. They’re nailing it both from the standpoint of somebody sitting on their couch purchasing something off their iPad, or somebody actually spending in a store, leveraging a smartphone app to augment the experience.”

Some analysts are encouraged that the November spending increase will result in a strong holiday shopping season overall. Seasonal sales account for 40 percent of annual sales for retailers. While consumer confidence sagged in the fall following the partisan battle in Washington over Obamacare that led to a limited government shutdown, recent data show that Americans feel better positioned to spend.

Preliminary numbers from the Thomson-Reuters/University of Michigan consumer sentiment index, released last Friday, show that US consumer sentiment surged in early December, jumping to 82.5, up from a final reading of 75.1 in November. This was the highest reading for the index since July.

The majority of gains were among households with incomes below $75,000, director Richard Curtin wrote in a statement.

But the National Retail Federation is less hopeful about a surge in holiday sales this month. While 141 million people shopped during the Thanksgiving weekend, the number of retail shoppers was 1.4 percent less than last year; average spending also dropped 3.9 percent to $407.