* Retail sales rise 0.7 percent in November
* Economists push up Q4 GDP forecasts on the data
* Big jump in new jobless claims dismissed as aberration
* Business inventories beat expectations in October
By Lucia Mutikani
WASHINGTON, Dec 12 U.S. 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 picture was clouded somewhat by other data on
Thursday showing the biggest jump in a year in first-time claims
for jobless benefits. Economists, however, largely dismissed
that report as skewed by a late Thanksgiving and other factors.
The Commerce Department said retail sales increased 0.7
percent last month as Americans stepped up spending on a wide
range of goods from automobiles to electronics. November's
increase was the largest in five months and followed a 0.6
percent rise in October.
"It should provide more confidence to the Fed that the
economic recovery has emerged from the political-induced
uncertainties of recent months essentially unscathed and
reinforce the expectation for the recent improved performance in
the data to be sustained," said Millan Mulraine, senior
economist at TD Securities in New York.
Economists polled by Reuters had forecast retail sales
advancing 0.6 percent last month.
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 0.5 percent after gaining 0.7 percent in October.
The core sales gain was consistent with consumer spending
rising at an annualized rate of at least 3.5 percent in the
fourth quarter, economists said. That would be a big step-up
from the third quarter's 1.4 percent pace.
"There are signs of an earlier pick-up in consumption that
is also likely to be the heart and soul of a future growth
acceleration," said Alan Ruskin, head of currency strategy at
Deutsche Bank Securities in New York.
U.S. stocks were trading lower as investors' attention
remained focused on next week's Fed policy meeting. U.S.
government bond prices fell, while the dollar rose against a
basket of currencies.
INVENTORY BUILDING CONTINUES
The relatively strong sales last month defied industry
expectations of a slow holiday season. Reports early this month
suggested shoppers spent less during the Thanksgiving weekend,
the traditional start of the holiday shopping season.
Middle-income shoppers have been careful in their spending,
waiting for the right promotions and in many cases shifting a
lot of their spending to big-ticket items like their cars or
home repairs and away from items such as clothing.
Home improvement chains Home Depot and Lowe's Inc last
quarter reported far better sales gains than chains such as
Macy's Inc or Target Corp.
Spending is being supported by solid job gains and steady
income increases, and could help shield the economy in the
fourth quarter from an expected effort by businesses to reduce
inventories that piled up during the July-September quarter.
The data prompted economists to raise their fourth-quarter
GDP growth estimates by as much as half a percentage point to as
high as a 2.2 percent annual rate.
Economists also said a second report from the Commerce
Department suggested businesses were not being as aggressive in
selling off inventories as had been expected, which could mean
any correction spills into the new year.
Inventories increased 0.7 percent in October, the largest
gain in nine months, after a 0.6 percent rise in September.
Lower gasoline prices are also helping, though they were a
drag on the retail sales figures, which are not adjusted for
The firming growth tone was tempered somewhat by a report
from the Labor Department that showed 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 and
surpassed economists' expectations for a rise to only 320,000.
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.
"Through the volatility, the trend in claims is likely still
flat-to-down, consistent with no let-up from the recent solid
pace in payrolls," said Jim O'Sullivan, chief U.S. economist at
High Frequency Economics in Valhalla, New York.
Nonfarm payrolls increased strongly in October and November,
and the jobless rate hit a five-year low of 7.0 percent.
The steady stream of fairly upbeat data should give the Fed
cover to start cutting back its monthly $85 billion bond buying
program soon, and could fuel some speculation a move could come
as early as the central bank's meeting on Tuesday and Wednesday.