Retail Sales Remain Healthy, Inventories Low

- Advance Retail Sales for November rose .3% versus estimates of a .4% gain and an upwardly revised .3% increase in October.
- Retail Sales Less Autos for November fell .3% versus estimates of a .1% decline and a .8% increase in October.
- Business Inventories for October rose .3% versus estimates of a .5% increase and a .5% gain in September.

BOTTOM LINE: US retail sales rose less than forecast last month as consumers pocketed some of their savings from lower gasoline prices instead of spending the cash, Bloomberg reported. Gas station receipts fell 5.9% in November, the biggest drop since 2003 after average gas prices fell to $2.30/gallon from $2.77/gallon in October. Moreover, last month was the ninth warmest November in US history, depressing sales of winter clothing. The Morgan Stanley Retail Index has risen 13% since late October versus a 7% gain for the S&P 500. I continue to believe retail will outperform through year-end.

US business sales rose .8% in October, more than double the increase in inventories and reinforcing forecasts that companies will increase production in coming months, Bloomberg said. I continue to believe inventory rebuilding will add to US economic growth over the intermediate-term as executive confidence rises further.