Friday, December 11th, 2009
Retail Sales Figures Boost Autos and Electronics
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Automakers like Ford Motor Company (NYSE:F) and Toyota Motor Corporation (NYSE:TM), along with electronics retailers like Best Buy Co., Inc. (NYSE:BBY), could see some upside from positive retail sales data released Friday.
Retail sales in November came in at $352.1 billion, up 1.3% from the previous month, versus market expectations of just a 0.6% gain, according to the U.S. Census Bureau. Retail trade sales were up 1.4% from a month ago and 2.2% from last year, building material and garden equipment dealers were down 9.3%, and gasoline stations were up 8.9%.
Aside from gasoline stations, which rose due to higher oil prices versus a year ago, the largest increases in spending were seen in automotive vehicle and parts dealers (up 2%) and electronics and appliances (up 2.8%). Meanwhile, the largest declines apart from building and garden equipment dealers were seen in clothing and furniture stores (both down 0.7%).
The big surprise was in auto sales, which rose despite the expiration of the so-called Cash for Clunkers program. Many industry players had been concerned that buying would cease when the program expired, but consumer spending appears to continue to be on the rise as the labor market is showing signs of stabilization and the economy moves further away from the recession.
Americans are also responding to discounts during the holiday shopping season. Sales on Black Friday and the weekend after Thanksgiving increased 0.5% as discounts on electronics and other products drew in shoppers, according to the National Retail Federation. Best Buy in particular drew in a particularly large crowd with its $547.99 42-inch flat-panel TV sale.
Still, some experts remain bearish on the recovery in the job market that is needed to spur spending. Anew survey of top CEOs found that it could take 12 to 18 months before any growth at large companies filters through to employment. In fact, only two in ten think that they will be hiring in the next six months, which could put the brakes on any recovery.
The labor market as a whole is nearly 11 million jobs short of its pre-recessionary employment rate, with 7 million jobs lost over the past two years during recession. American businesses would need to create 580,000 jobs per month until 2011 in order to realize a full recovery, and few economists would be willing to offer such a bullish forecast.
In the end, many experts believe that a full recovery in the job market could take at least five years. However, consumer spending is continuing to rise as they gain confidence in their own lives and the health of the overall economy as the U.S. moves away from recession.
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-- Written by Simon Monger
