Retail sales surged in November, but ...

NEW YORK (CNNMoney.com) -- Retail sales surged in the important holiday shopping month of November as shoppers flocked to malls in search of juicy deals on toys, electronics and other popular gift items.

The Commerce Department said retail sales jumped a much stronger than expected 1 percent last month, compared with a revised 0.1 percent decline in October. The government had originally reported a 0.4 percent decline for October.

November's gain was the biggest since this past July, when overall sales rose 1.4 percent.

Economists surveyed by Briefing.com on average had forecast an increase of just 0.2 percent for the month.

Anxious retailers will see last month's robust sales activity as a welcome sign that the buying momentum could carry through the critical holiday fourth quarter. But some industry experts aren't so sure, citing changes to the way the government data is tabulated.

"The Commerce Department said it made some revisions last month to the methodology it used to calculate the data. This makes it risky to over interpret the data given the unusually big increases in the report," said Michael Niemira, retail economist with the International Council of Shopping Centers (ICSC).

Ian Shepherdson, chief U.S. economist with High Frequency Economics, called the numbers "baffling."

"Overall, these data imply a decent increase in real consumption in November, but we think it very likely that sales will either be revised down or there will be a hefty drop in December," he wrote in a note Wednesday.

Nevertheless, Niemira said the broad-based strength across the board last month was enough to convince him that consumer demand is still quite robust.

That's important for two reasons: First, consumer spending fuels two-thirds of the nation's economy. Second, November and December are critical for the retail industry since the two-month period typically accounts for close to half of merchants' annual profits and sales.

The big slump in the housing market has sparked worries that spending might fall off. Not so, said Peter Morici, an economist and professor at the Robert H. Smith School of Business at the University of Maryland.

"Although the housing market has softened since the summer, house prices are still up about 55 percent over the last five years," he wrote in a report Wednesday.

"While homeowners may not expect much appreciation over the next twelve months and values will fall in some cities and communities, homeowners still have a lot of untapped equity to finance additional spending," Morici said. "The reservoir of wealth created by the housing boom has not evaporated and is only partially spent."

Sales excluding autos and auto parts also rose a strong 1.1 percent last month, after a revised 0.3 percent dip in that reading in October. The government had originally reported a 0.4 percent decline in that reading. Economists had forecast a 0.3 percent increase.

In its report, the Commerce Department said electronics sales surged 4.6 percent and sales at food and beverage stores rose 0.9 percent. Unseasonably warm weather in some parts of the country helped boost sales of garden equipment and building materials 1.8 percent.

Auto sales rose 1.2 month last month, while sales at gasoline stations rose 2.3 percent. Excluding sales in these two categories, retail sales were still up 0.9 percent in November.

But higher than average temperatures didn't help some retailers last month. November sales were flat at both clothing stores and department stores. And furniture sellers suffered a 0.1 percent decline.

Some big discount chains have struggled this holiday season.

Wal-Mart, (Charts) the world's largest retailer, reported that sales at stores open at least a year slipped 0.1 percent last month, even though it was first out of the gate with the most aggressive price cuts on Black Friday, the day after Thanksgiving, the traditional start of the holiday gift-buying period.

Gap Inc. (Charts) and Abercrombie & Fitch (Charts) were other laggards last month.

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