by Calculated Risk on 12/13/2005 01:24:00 PM

Reuters reports:

U.S. retail sales rose a smaller-than-expected 0.3 percent in November and fell when a surge in auto purchases was excluded, setting the stage for what could be a disappointing holiday shopping season, government data showed on Tuesday.

Sales of motor vehicles and parts rose for the first time since July, surging 2.6 percent. But without the auto sales, retail demand fell 0.3 percent, the Commerce Department said. That was the first decline since April 2004.
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"A report like this will continue to fuel the debate about how strong consumer spending will be over the holiday season," said Alan Gayle, a managing director at Trusco Capital Management in Atlanta.
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Much of the weakness in November's sales was due to a 5.9 percent drop in sales at gasoline stations -- a direct result of the decline in gas prices last month and hardly bad news for consumers.
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"Excluding autos, spending growth looks healthy -- not a blockbuster holiday season, but far better than it appeared a couple of months ago when gasoline prices were over $3 per gallon," economist Nigel Gault said.

When the drop in sales at gasoline stations is excluded, retail sales rose 1.0 percent in November.

October sales were also revised higher, helping take some sting out of the disappointing result. Total sales rose 0.3 percent that month, up from the 0.1 percent decline initially reported.
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Still, with October and November sales weaker than expected, analysts said there could well be an outright decline in retail sales in the fourth quarter -- which in turn would hurt economic growth in the final three months of 2006.

"This was a disappointing number relative to expectations and certainly consistent with the idea that consumer spending is going to be a much smaller contributor to economic growth in the fourth quarter than in the third," said Chris Probyn, chief economist at State Street Global Advisors in Boston.
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"Seasonal business remains below expectations," Redbook said. "An early-December lull was factored into most sales plans for the month, so retailers remained cautiously optimistic as they continued to sit out the pre-Christmas wait."

I hope these two posts make the retail outlook clear.