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Holiday sales slowly gain traction

FILE - In this Thursday Nov. 22 2012 file phocustomer makes purchase Times Square Toys-R-Us store New York. U.S. retail

FILE - In this Thursday, Nov. 22, 2012, file photo, a customer makes a purchase in the Times Square Toys-R-Us store in New York. U.S. retail sales rose 0.3 percent in November from October, the Commerce Department said Thursday. That offset a 0.3 percent decline in October from September. (AP Photo/John Minchillo, File)

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Updated: January 15, 2013 11:43AM



WASHINGTON — U.S. consumers shook off Superstorm Sandy last month and stepped up holiday shopping, helped by a steady job market and lower gas prices.

Retail sales rose 0.3 percent in November from October, reversing the previous month’s decline. Sales increased mostly because Americans spent more online, bought more electronics and began to replace cars and rebuild after the storm.

And a sharp drop in gas prices lowered the overall increase. Excluding gas stations, retail sales rose a solid 0.8 percent, according to the Commerce Department report released Thursday.

Still, department store sales tumbled. And consumer confidence has slipped in recent weeks, which has raised concerns that some Americans may be growing worried about looming tax increases. That could dampen December sales. Many retailers depend on the two months of holiday shopping for roughly 40 percent of their annual revenue.

High unemployment and weak wage growth have kept consumers cautious about spending, which accounts for 70 percent of economic growth. Most economists expect just slim gains in consumer spending in the final three months of the year, which should keep growth weak.

“Despite the positive numbers today ... we are not in a consumer-led recovery,” said Chris Christopher, an economist at IHS Global Insight.

A Labor Department report suggested the job market is improving, which could set the stage for more spending next year.

Applications for unemployment benefits, which are a proxy for layoffs, fell by 29,000 last week to a seasonally adjusted 343,000. That’s the second-lowest total this year.

The drop indicates companies are cutting fewer jobs and not yet panicking about the “fiscal cliff.” That’s the combination of tax increases and spending cuts set to take effect next month if President Barack Obama and Republican lawmakers fail to reach a budget deal before then.

Consumers are also seeing relief at the gas pump, which leaves them more disposable income. Gas prices have fallen almost 50 cents over the past two months, to a nationwide average of $3.30 a gallon, according to AAA.

And a third report suggested those declines will likely continue. Wholesale gas prices fell 10.1 percent in November, the Labor Department said. That’s the most in more than three years. It pushed down a measure of wholesale prices 0.8 percent, the most since May.

“Falling gasoline prices are hurting sales at the pump, but helping many Americans spend at the mall,” Christopher said.

Economists saw mixed signals for the holiday shopping season in the latest retail sales data. Online and catalog shopping surged 3 percent, the biggest gain in 13 months. But department store sales fell 0.8 percent. And Americans spent less at stores like Wal-Mart and Target.

And a survey last week found Americans’ confidence is weakening. Many are starting to worry about the fiscal cliff. Economists say that if those tax increases and spending cuts are not averted, the economy would slip into recession.

“With consumer confidence now falling, hopes that retailers would enjoy a robust holiday shopping season are fading,” Paul Dales, an economist at Capital Economics, said.

The season got off to a strong start over the Thanksgiving Day holiday. Shoppers hit stores and clicked on websites in record numbers, according to a survey released by the National Retail Federation. Consumers were attracted by efforts to make shopping easier, such as opening stores on Thanksgiving evening to expanding shipping and layaway options.

But since the Black Friday weekend, sales have been disappointing, analysts say. Some stores like Macy’s, hurt by Superstorm Sandy, have already extended promotions to make up for lost business.

Retailers are facing many of the same issues they faced last year. Budget-conscious shoppers who splurged over the Thanksgiving weekend are now holding out for better deals and waiting for their bank accounts to recover.

Even healthy online sales have a down side, said Michael Brown, a partner in the retail practice of A.T. Kearney. Online buyers tend to be more focused in their buying. Shoppers linger more in stores and buy more on impulse.

“When you visit a store, you shop. When you go online, you buy targeted items,” Brown said.

Chicago-based ShopperTrak said Thursday that customer visits and sales for the first week of December were both down compared with the same week in 2011. Visits and sales were both higher from the previous week.

ShopperTrak counts foot traffic and its own proprietary sales numbers from 40,000 retail outlets across the U.S.

And some of the increase in November retail sales was because of a rebound from Superstorm Sandy. Auto sales jumped 1.5 percent, as many people sought to replace damaged vehicles. Sales at home improvement stores increased 1.6 percent.

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D’Innocenzio reported from New York. AP Economics Writer Martin Crutsinger contributed to this report.

Follow Chris Rugaber on Twitter at www.Twitter.com/ChrisRugaber.



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