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Ahead of the Bell: US retail sales

December 11, 2015

WASHINGTON (AP) — The Commerce Department releases November retail sales data Friday at 8:30 a.m. Eastern.

SLIGHT INCREASE: Economists forecast that retail sales rose a seasonally adjusted 0.3 percent last month, according to a survey by FactSet. This would be a modest acceleration from a gain of 0.1 percent in October and flat sales in September.

HOLIDAY SALES: November marks the traditional start of holiday shopping — a period when consumers often splurge and provide a better sense about their confidence in the economy. But early reports indicated depressed sales during Thanksgiving weekend, with the mania of Black Friday store openings fading in an era of online shopping.

The National Retail Federation estimated that spending averaged $299.60 person over Thanksgiving weekend. That was down from $381 last year. But the trade association says the figures are not comparable due to methodology changes.

The retail sales report will provide a fuller look at where people are spending. Online sales have risen 7.1 percent from a year ago. More people are also spending money at restaurants and buying autos, but shopping at department stores has increased a mere 0.5 percent over the past 12 months as tastes in shopping have adapted to a digital era.

GAS WEIGHS ON SALES: Overall sales growth has been relatively tepid this year due to lower gasoline prices. Purchases at gas stations have tumbled 20 percent this year. Prices at the pump nationwide are averaging $2.01 a gallon, down 24 percent from a year ago, according to AAA.

Excluding gas stations, retail sales have advanced 4.1 percent this year. The average household has an additional $660 to spend this year because of cheaper gas, according to the government.

Still, it’s unclear whether cheaper gas has fueled more consumer confidence. Many Americans appear to be pocketing the savings.

Total consumer spending — which includes services — rose just 0.1 percent in October, according to the government. But the savings rate was 5.6 percent of after-tax income, the highest monthly savings level in nearly three years.

Economists watch the retail sales report closely because it provides the first indication each month of the willingness of Americans to spend. Consumer spending drives 70 percent of the economy. Yet retail sales account for only about one-third of spending, with services such as haircuts and Internet access making up the other two-thirds.

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