US retail sales near all-time high but economists voice caution

RETAIL sales in the US hit a three-year high in November, figures yesterday revealed, boosting early trading in New York.

In stark contrast to Scotland, which saw many high streets come to a standstill during the "big freeze", total sales in America rose 0.8 per cent last month, sparking hopes that the world's largest economy has picked up steam in the fourth quarter.

The increase, the fifth consecutive monthly gain, was fuelled in particular by drivers stocking up on petrol ahead of the Thanksgiving holiday as well as holidaymakers splashing out on extra clothing.

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Total monthly sales reached $378.7 billion (245bn) in November, the highest level since November 2007 - the month in which retail sales reached an all-time record.

While the figures gave rise to optimism that an improving US economy would spur growth elsewhere, particularly in Britain, economists warned that 2011 was likely to throw up further challenges for America.

Ben Williamson, senior economist at the London-based Centre for Economics and Business Research, said: "Despite better-than-expected retail sales heading in to the holiday season, the world's largest economy still faces considerable problems.

"Inflation of only 1.2 per cent reflects continued weak demand and unemployment remains stubbornly high at 9.8 per cent."

However, economists across the Atlantic have improved their forecasts for fourth-quarter growth as American shoppers - for the moment at least - return to the streets.

Chris Low, chief economist at FTN Financial in New York, said: "Consumption is likely to post a solid rise in the fourth quarter. For the first time since the recession ended, consumers are contributing to growth in a real way."