Retail spending perked up in November, gaining 0.7% in the aggregate. This increase was solid and matched expectations. (The data were provided by the U.S. Commerce Department.) However, if we back out the auto component, which tends to distort things by the sheer magnitude of the price of a new car, the gain was 0.4%. That was twice the month's expected increase.

Overall, this was the best showing in five months for the retail sector. The 0.7% rise was also the second consecutive month in which we saw a strong increase, with sales having been up by a notable 0.6% in October. The October increase, it should be noted, was revised up from an initially estimated gain of 0.4%.

Meanwhile, the back-to-back solid monthly increases in spending suggest that the better hiring news--a pickup in job growth was announced last Friday--is now encouraging Americans to more freely open their wallets this holiday shopping season. That is especially so on big-ticket items, such as cars and other vehicles. The good retailing news also suggests that the holiday season, which had seen an underwhelming performance on Black Friday, may be a decent one after all.

Also of note, the report showed that Americans were shifting their buying to online and catalog retailers, preferring those outlets, in increasing numbers, for spending to the more traditional mall shopping. That is likely to be trend that continues going forward. Of note, online and catalog sales rose 2.2% last month, the best performance in a year and a half.

However, sales were mixed to lower at some retail chains, which has been the pattern throughout the year. On the whole, we sense that the Christmas season will be a bit better than ordinary this year, but not sufficiently strong to alter our view that GDP growth, which surged ahead by 3.6% in the third quarter, will now slow down a little, to perhaps 2%, or less, in the current three months. The anticipated quarter-to-quarter deceleration in growth assumes that inventories, which bounded ahead last quarter, will now have to be worked down somewhat.

On the whole, this was a decent report, and looked at together with accompanying data over the past couple of weeks, strengthens the case that the Federal Reserve, which holds its next FOMC meeting in the week to come, will announce a modest slow down in its bond buying efforts at that time.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.