Reasonably strong consumer sentiment and a good jobs report are both expected to give retailers a holiday boost, despite the lull in shopping until the final pre-Christmas weekend.
The University of Michigan Consumer Sentiment Survey, released on Friday, indicated a slight uptick in confidence as the reading rose moderately in December to 99.2 from 96.8 last month. The increase marks the highest survey level since May, with gains led by higher income households that benefit from the strong stock market, according to Moody’s Analytics economists.
Separately, the U.S. economy added 266,000 jobs in non-farm payrolls in November, the U.S. Department of Labor said. That compares with 180,000 expected and the 156,000 jobs added in October.
“Part of the impressive headline gain came from the end of the GM strike,” Sarah House, senior economist at Wells Fargo Securities, said, adding that transportation and warehousing employment jumped 16,000 most likely due to “seasonal factors connected to the shift in online holiday sales and delivery needs.”
Traditional retail hiring ticked up only 2,000 in November, she noted.
“Today’s job report, more than any other report in recent months, squashed any lingering concerns about an imminent recession in the U.S. economy,” Gad Levanon, head of the Labor Market Institute at The Conference Board, said.
As for implications for the holiday shopping season, “A strong labor market is good news for retailers, as consumers are entering the holiday season with both the ability and the willingness to spend,” Levanon said. “This report will significantly reduce the Federal Reserve’s appetite for additional interest rate cuts in the near term.”
The Federal Reserve’s FOMC is slated to meet on Tuesday and Wednesday to review economic indicators and discuss policy-making decisions.
