Holiday outlook brightens for retailers

NEW YORK — The outlook for the holiday season brightened Thursday as many of the nation's retailers reported an improvement in sales in October. Discounters, however, had another month of lackluster results as their customers cut back their spending again.

Many mall-based apparel stores, including Limited Brands, Abercrombie & Fitch Inc. and Gap Inc., saw a rebound in spending, helped by cooler weather. Wal-Mart Stores Inc., Big Lots Inc. and ShopKo Stores Inc. were among the merchants who extended a sluggish streak that began in June.

"There was definitely more broad-based growth across the apparel group. But the low-end consumer continues to be hurt on two fronts — jobs and wage growth and higher energy prices," said Ken Perkins, an analyst at RetailMetrics LLC, a research firm in Cambridge, Mass.

"This is a little more encouraging as we head into the holiday season, though it is not a harbinger for a stellar shopping season."

In other economic news Thursday, the Labor Department reported that the productivity of America's workers grew at a 1.9 percent annual rate in the third quarter, the smallest gain since late 2002.

The increase in productivity — the amount an employee produces for every hour of work — followed a brisk 3.9 percent pace registered in the second quarter. The figure for the July-to-September period was better than the 1.7 percent growth rate some economists were forecasting.

Analysts have been expecting productivity growth to slow somewhat based on the hope that businesses would seek to hire workers to help meet customer demand, rather than rely largely on greater efficiencies from fewer or existing workers to do that.

"There are some indications that job growth is going to continue and could pick up a bit of speed in the fourth quarter," said Sherry Cooper, chief economist at BMO Nesbitt Burns.

In other economic news:

• Initial claims for unemployment benefits plunged last week by a seasonally adjusted 19,000 to 332,000, the Labor Department said in a second report. A portion of the decline reflected fewer hurricane-related claims in Florida, a department analyst said. Even so, the figures — better than economists expected — offered hope that the recovery in the labor market may be gaining traction.

• Rates on 30-year, fixed-rate mortgages averaged 5.70 percent for the week ending Nov. 4, mortgage giant Freddie Mac said in its weekly survey released Thursday. That was up from 5.64 percent last week.