Last month, the gauge of US consumer spending took a sharp rise as the holiday shopping season kicked off in a brisk start. This suggests a considerably enough momentum in the economy of the country for the Federal Reserve to increase interest rates soon for the very first time in over a decade. The Commerce Department said in a statement that the retail sales which did not include gasoline, automobiles, building materials as well as food services increased by about 0.6 percent after a 0.2 percent unrevised gain the other month. The so-called core retail sales will correspond closely with the spending component of the consumers of the gross domestic product.
The economists polled by the Reuters made a forecast that core retail sales will increase by at least 0.4 percent. Consumer spending in the US accounts for more than 2/3 of the activity of the economy and the figure surprisingly slowed down in the months of September and October. The moderation came despite having a tightening labor market wherein the household inform started to lift up. The latest sign of the strength in the economy is in the consumption support expectations which the Federal Reserve will raise the benchmark overnight interest rate from almost zero when the policymakers conclude the two-day meeting next Wednesday. The rates in the US have not been raised since June 2006. The overall retail sales increased only by 0.2 percent last month as the automobile sales fell and when the gasoline fared cheaper in the market. The retail sales edged up only by 0.1 percent in the month of October. The sales in automobile slipped by .4 percent in November which is the largest decline that happened since June this year and fell by 0.3 percent last October. Although the automakers was deemed as the industry with the strongest sales last month, the units that there sold were slightly below the sales in October. The receipts at service stations fell by 0.8 percent after it declined by 1.0 percent last October. Even the sales reported by Paper Mart were also affected along with the other retailers in the market.