U.S. consumers went on a shopping binge last month as the holiday season began, leading to big gains among online retailers, electronics stores and furniture stores.

The Commerce Department said Thursday that sales at retailers and restaurants jumped 0.8% in November from the previous month, after a 0.5% gain in October. Consumers’ willingness to splurge should give the economy a boost in the final three months of the year.

A category that mostly includes online shopping rose 2.5% in a sign of the continuing dominance of e-commerce. Sales leapt 2.1% at electronics stores and 1.2% at furniture stores.

“A good start to the holiday shopping season,” David Berson, chief economist at Nationwide, said. “Consumers are responding positively to solid job gains, increasing income growth, and record levels of household net worth.”

The figures were lifted by a large increase in spending at gas stations, which mostly reflected higher prices. But sales also rose at clothing stores, sporting goods retailers, and home and garden stores.

Consumers are more confident than they have been since 2000, according to surveys. Two reasons are unemployment has fallen to a 17-year low, and the economy has generated job gains for 86 straight months.

Read: U.S. unemployment rate steady at 4.1%

Those trends are accelerating growth. The economy has expanded at a 3.2% annual rate in the last six months, the first time growth has topped 3% for two quarters since 2014.

Derek Holt, vice-president and head of Capital Markets Economics at Scotiabank, also points to income gains in the U.S. as a driver of spending. In a report, he said nominal personal income was “up 0.4% m/m in each of the months of September and October in a marked recent acceleration.”

On the downside, he said, “It’s possible such spending gains may have also further eroded the saving rate […].” To assess whether or not that occurred, he’ll watch for services spending and saving rate data in next Friday’s broader consumption report.

“Recall that the personal saving rate at 3.2% in October was at about its lowest since just before the crisis,” says Holt. 

Thursday’s data suggests growth could reach 3% or better in the fourth quarter, though fourth-quarter figures won’t be available until January.

Auto sales slipped last month after rising in previous months as residents of Texas and Florida replaced hurricane-damaged cars. But auto dealers were the only retailers to report a drop in sales. Restaurants and bars said that sales grew 0.7% in November.

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Originally published on Advisor.ca
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