Holiday Retail Sales Off To A Strong Start: 5 Great Picks

Retail sales increased in November, indicating that holiday season buying was off to a stellar start. Further, the increase in retail sales for October was revised significantly higher. The jump in sales also dispelled lingering concerns about the state of the economy. They also indicate that fourth-quarter expansion could exceed the initial set of modest projections.

A slide in spending at service stations was largely a result of a decline in gasoline prices. However, this was a positive development for consumers since it raised their purchasing power substantially. With only the first part of the holiday season out of the way, retail sales are set to remain robust over the next few months. This is why it makes good sense to invest in retail stocks at this time.

Strong November Sales Negate Slowdown Fears

According to the Department of Commerce, retail sales increased 0.2% in the month of November, in line with the consensus estimate. More significantly, October’s initial increase of 0.8% was revised upward to reflect an increase of 1.1%. Taken together, these increases suggest that the economy has started the fourth quarter on a far stronger note than initially estimated.

Further, core retail sales, which exclude the impact of gasoline, automobiles, building materials and food services, increased 0.9%. This is significantly higher than the 0.7% increase for October, which in itself has been upwardly revised. This metric closely corresponds to the consumer spending component of GDP.

The report will do much to dispel fears created by a yield curve inversion and heavy losses on Wall Street. Another factor negating economic concerns is the labor market’s ruddy health. Last week’s data on jobless claims shows that the number of Americans claiming unemployment benefits has once again fallen to a 49-year low.

Sales on Track to Meet Holiday Season Projections

Per the National Retail Federation’s (NRF) estimates, holiday retail sales for November and December are projected to increase between 4.3% and 4.8% year over year to between 717.45 billion and $720.89 billion. Incidentally, seasonally adjusted retail sales for October increased 0.7% on a monthly basis and were up 5% on a yearly basis.

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