U.S. retail sales surged by 0.7% in November, surpassing market expectations of a 0.5% increase, as consumers continued to spend robustly on motor vehicles and online shopping.
This growth underscores the economy's resilience as the year concludes, with consumer spending supported by strong labour market conditions and household balance sheets.
The Commerce Department's report on Tuesday showed retail sales up 3.8% year-on-year. Core retail sales, which exclude automobiles, gasoline, building materials, and food services, rose 0.4% after a slight decline in October.
Spending on autos jumped 2.6%, driven partly by vehicle replacements following hurricane damage. Online sales climbed 1.8%, boosted by early holiday promotions.
Gains were also seen in building materials, electronics, and sporting goods. However, there were signs of caution, with declines in dining out, clothing, and grocery sales, hinting at financial strain among lower-income households.
The Federal Reserve, meeting this week to decide on interest rate policy, is widely expected to announce its third rate cut since September. However, the stronger-than-expected retail sales data and persistent inflation could prompt the Fed to consider pausing rate cuts in early 2025.
The report comes amid challenges as industrial production declined by 0.1% in November, with the Boeing strike and weaker aerospace manufacturing weighing on output. Despite this, motor vehicle production rebounded with a 3.5% increase.
