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Retail sales up, prices dip
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December 11, 1998: 10:23 a.m. ET
November sales higher than expected; PPI down 0.2% on energy decline
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WASHINGTON (CNNfn) - Consumer buying - both at car dealers and department stores -- was stronger than expected in November in a continued atmosphere of low inflation, according to two U.S. government reports issued Friday.
November retail sales rose 0.6 percent, well above analysts' estimates of a 0.1 percent increase, according to data from the U.S. Commerce Department. The overall figure was boosted by a 1.3 percent increase in auto sales. Excluding autos, retail sales rose 0.4 percent, just above analysts' forecasts of a 0.3 percent increase.
Also boosting the retail report a 1.4 percent increase in November department store sales, a possible hint of a strong holiday season. The increase was the largest since the 1.5 percent gain reported in February.
Meanwhile, the fuel to power those new vehicles and take them to the shopping mall became a lot cheaper. The Labor Department's producer price index for November fell 0.2 percent, compared with analysts' estimates of an unchanged figure. The drop was spurred by a 1.2 percent decline in energy prices, including a 6.9 percent tumble in gasoline prices.
Excluding food and energy costs, the index was up 0.1 percent; analysts had expected the figure to be unchanged.
The treasury market dipped slightly on the release of the data. But then the benchmark 30-year bond rebounded; in mid-morning, it was up 13/32 to 104-31/32, yielding 4.92 percent.
The fact that the retail sales figures were for November -- and not for more closely watched periods such as December and the start of the new year -- is cause for shrugging off the data, according to one economist.
"We think we're going to see some slackening of employment" and other strong aspects of the economy at the beginning of 1999, Mitchell Held of Smith Barney told CNNfn. "The combination should slow down the pace of consumer spending."
In October, the overall PPI rose 0.2 percent, with a 0.1 percent increase excluding food and energy costs. Retail sales were up 1.2 percent, revised from a 1 percent gain in the initial report issued last month, with sales excluding autos revised to up 0.8 percent from the originally reported 0.5 percent rise. 
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