Holiday purchases driving up US spending

Customers streaming into Macy's flagship store in Herald Square, New York, for early Black Friday sales on Nov 26. Year-end buying is pushing up the US economy. In addition to sustained purchases of big-ticket items, sales at retailers are being spur
Customers streaming into Macy's flagship store in Herald Square, New York, for early Black Friday sales on Nov 26. Year-end buying is pushing up the US economy. In addition to sustained purchases of big-ticket items, sales at retailers are being spurred by discounts on holiday gifts.PHOTO: AGENCE FRANCE-PRESSE

WASHINGTON • Consumer purchases climbed in November by the most in three months, indicating that the biggest part of the United States economy was gaining momentum heading into the holiday shopping season.

Spending advanced 0.3 per cent, matching the median forecast in a Bloomberg survey, to US$12.43 trillion (S$17.5 trillion) at an annualised rate, a Commerce Department report showed on Tuesday. That followed no change in the prior month.

The figure, which was to be made public yesterday with the commerce agency's report on personal income and spending, was released early on the Bureau of Economic Analysis (BEA) website.

The only number issued ahead of time was the current value of household outlays. Other data typically contained in the report, including changes in incomes, inflation-adjusted spending and the savings rate, will be issued as scheduled.

ENCOURAGING GROWTH

The numbers are a little bit stronger, and supportive of at least 2 per cent growth in the fourth quarter.

MR MIKE ENGLUND, chief economist at Action Economics

"There has been an inadvertent release of some of BEA's personal consumption expenditure data for November as well as for previous months," agency spokesman Jeannine Aversa said in a statement.

"BEA will take steps to ensure that this does not happen again."

Household expenditures, which account for almost 70 per cent of the economy, are being powered by steady hiring, cheap petrol and rising home equity that also lifted US growth in the last quarter.

In addition to sustained purchases of big-ticket items, such as cars, sales at retailers are being spurred by discounts on holiday gifts.

"The numbers are a little bit stronger, and supportive of at least 2 per cent growth in the fourth quarter," said chief economist Mike Englund at Action Economics in Boulder, Colorado. "It should also be supportive of the first quarter. We should get a nice bounce, but with a lag, as lower gasoline prices allow households to spend more money on other goods."

Estimates in the Bloomberg survey of 77 economists for consumer spending, before adjusting for changes in prices, ranged from no change to a 0.5 per cent increase.

The inadvertent release of the data "is probably a little embarrassing" for the BEA, said Mr Englund. Still, they normally "do a great job with the website".

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on December 24, 2015, with the headline 'Holiday purchases driving up US spending'. Print Edition | Subscribe