As per the report of the U.S.Commerce Department, there is a bounce in the Retail sales by 1.2 percentduring the month of November which is comparatively 1% higher than 07 Octoberand 3.2% higher than 2006 November. This is assumed to be the strongest salessince July, and wipes of the recession anticipated by opinion leaders. Bigdecline in the credit market and a slump in the housing values were theanticipated reasons for recession. The downside risks that were feared probablya month before is diminished by this retail upsurge. Economists werecontemplating that consumers might curtail their purchases owing to the bankstightening of their credit policies. But, the central bank has reduced the interestrates thereby lowering the borrowing costs of the consumers which eventuallyresulted in a positive increase in the Retail sales.
Categories of auto, restaurantand gasoline rose by 0.1 percent and electronic appliances by 5.6 percent overthe last year. Sales of clothing and related accessories increased by 4.7percent over the last year. General merchandise and other departmental storessaw an increase of 4.6 percent increase over the last years sales figures. Sale of furnitures rose by 1.5 percent, apparel by 2.9 percent and building material by 1.2percent. Food store sales fell by 0.2 percent. Mail order and internet salesbounced by 2.9 percent. Wholesale sales rose by 3.2 percent which is consideredto be the biggest increase in the last 34 years and the rise in gasoline pricesis assumed to be behind this upsurge.
Industry enthusiasts feel thatthe rise in the vehicle sales is due to the appealing discounts offered bycarmakers that reduced the financing rates to an incredibly low level. Increasein the gasoline costs substantially made the service station sales to appearstronger.
Predictions for the year end Retailsales:
The overall retails sales figureshave a positive increase which indicates a further increase of 4.5 percent forthis year. Despite these hopes, industry analysts predict that sales inDecember might reflect a weaker activity. Economic experts believe thatconsumer spending will slow down as we go through the year. Deloitte Web castspredict that general merchandise, apparel and furniture would be a bitdisappointing. Warm temperature makes the winter wear sales decline and floodsin the Midwest would result in closing down of stores. Slump in housing andintense credit crunch might reduce the consumers confidence. A furtherdownturn in sales is predicted during the first three months of the next year. Thesepredictions paint an uncertain sales picture for the forthcoming holidayseason. High end consumption helped the retail industry during 2003 and 2004,but is slowing now.
But at the same time, theconsumer will still be the lynchpin in the economy. The monetary and fiscalpolicy, and liberalization of the interest rates might cause a probable changein the consumer spending thereby resulting in an increase in the overall retailsales.
References:
http://retailindustry.about.com
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