US retail sales signal resilient economy

US retail sales signal resilient economy
By Eoin Callan in Washington
Copyright The Financial Times Limited 2006
Published: December 13 2006 14:38 | Last updated: December 13 2006 14:38



US retail sales rose sharply last month in a sign that American consumers are continuing to drive economic growth despite a continued slowdown in the housing market.

Retail sales rose by 1 per cent to $368.9bn last month, an increase that was five times greater than the 0.2 per cent lift expected by Wall Street economists.

The strong rise underscores the Federal Reserve’s view that the economy is headed for moderate growth and that the housing slowdown will not unduly undermine consumer confidence.

There were unexpected signs of a pick-up in spending on housing as sales of building materials rose to $30bn from $29bn.

The biggest increase was seen at online and catalogue retailers, which saw sales rise 10 per cent to $24bn as holiday shopping got underway.

Sales were also higher than previously thought in October, while the three month trend showed sales were 5.3 per cent higher than a year ago.

The signs of robust spending prompted a retreat by investors to scale back their expectations of interest rate cuts. Treasuries fell as the yield on the benchmark 10-year rose 5 basis points to 4.53 percent.

The dollar edged higher as currency investors welcomed signs of a stronger economy.