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U.S. Retail Sales Rise 0.2% In November, Slightly Less Than Expected

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With a steep drop in sales by gas stations partly offsetting notable growth at other stores, the Commerce Department released a report on Friday showing a slightly smaller than expected increase in U.S. retail sales in the month of November.

The Commerce Department said retail sales edged up by 0.2 percent in November after spiking by an upwardly revised 1.1 percent in October.

Economists had expected retail sales to rise by 0.3 percent compared to the 0.8 percent increase originally reported for the previous month.

The weaker than expected sales growth was partly due to the steep drop in gas station sales, which plummeted by 2.3 percent in November after soaring by 3.2 percent in October. The pullback reflected a substantial decrease in gas prices.

Meanwhile, sales by non-store retailers surged up by 2.3 percent in November after climbing by 0.8 percent in October, as consumers did more of their holiday shopping online.

The report also showed notable sales growth at electronics and appliance stores and furniture and home furnishings stores, which jumped by 1.4 percent and 1.2 percent, respectively.

Excluding a modest increase in sales by motor vehicles and parts dealers, retail sales still rose by 0.2 percent in November after jumping by an upwardly revised 1.0 percent in October. The uptick in ex-auto sales matched economist estimates.

Meanwhile, the report said closely watched core retail sales, which exclude autos, gasoline, building materials and food services, increased by 0.9 percent in November after climbing by an upwardly revised 0.7 percent in October.

"Along with the continued strength of the labor market, the boost to real incomes from the recent plunge in gasoline prices appears to be providing a big support to spending growth, which could continue for a few more months," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, "Nonetheless, with the earlier boost from tax cuts now fading and rising interest rates likely to become an increasing drag, we still expect consumption growth to slow next year."

The Commerce Department said the annual rate of retail sales growth slowed to 4.2 percent in November from 4.8 percent in October.

The annual rate of ex-auto sales growth also slowed considerably to 4.9 percent in November from 6.0 percent in the previous month.

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