The 0.9 percent sales gain last month to $322.4 billion follows no change in October, previously reported as a 0.3 percent decrease, the Commerce Department said in Washington. Jobless claims unexpectedly rose last week, as workers held off filing until after Thanksgiving, the Labor Department said.

``It looks like we are still managing to spend more even after'' a third-quarter pace that was the fastest in six years, said Steven Wieting, a senior economist at Citigroup Global Markets in New York. With consumers still spending and businesses producing more trying to catch up, ``expect a real strong first half'' of 2004.

Consumer spending accounts for about 70 percent of the economy. DaimlerChrysler AG's Chrysler unit says industry sales in December are accelerating, and manufacturers such as Agilent Inc. say rising demand will increase corporate purchases of equipment that it sells to semiconductor and mobile phone makers.

Excluding autos, sales rose 0.4 percent for a second month, marking the seventh straight increase.

Economists had expected retail sales would rise 0.7 percent to $320.8 billion last month, according to the median of 68 forecasts in a Bloomberg News survey of economists. Sales excluding automobiles were expected to rise 0.3 percent to $244.7 billion following a previously reported 0.2 percent October rise.

Inventories

A larger-than-expected rise in business inventories in October suggested that companies were trying to keep up with increased demand. The value of stockpiles at manufacturers, retailers and wholesalers rose 0.4 percent for a second straight month, the Commerce Department reported separately. Business sales jumped 0.7 percent after a 0.9 percent increase.

The Labor Department said initial jobless claims rose by 13,000 to 378,000 last week. The Thanksgiving Day holiday Nov. 27 contributed to last week's increase as idled workers delayed filing from the week before, the government said.

Prices of goods imported into the U.S. rose 0.4 percent in November, the first increase since July, as the decline in the value of the dollar made foreign goods more expensive and oil prices climbed, the department also said.

Signs of rising inflation and the strength in sales pushed down U.S. Treasury securities. The benchmark 10-year note fell 11/32, pushing up the yield 5 basis points to 4.36 percent at 10:29 a.m. New York time.

Auto Sales

Excluding petroleum, the import price index gained 0.3 percent after falling 0.1 percent the previous month.

Auto dealers lured more buyers into showrooms last month by boosting discounts and other incentives. Sales increased 2.6 percent last month, the biggest rise since March, after falling 1.4 percent, the Commerce Department reported.

Chrysler and other automakers are selling cars at an annual rate as high as 17.7 million, Gary Dilts, Chrysler senior vice president of sales, said in an interview this week. Chrysler added no-interest loans for as long as 72 months to all minivans Friday, and General Motors Corp. introduced $750 bonus cash for employees and $500 for suppliers.

``The sales pace is going to be frantic this month,'' Dilts said.

Sales at electronics and appliance stores rose 2.2 percent, the most since May, while furniture sales increased 1 percent, the Commerce report showed. Sales at clothing and accessory stores rose 1.1 percent after no change.

Agilent

Ned Barnholt, chief executive officer at Agilent, said increased purchases of consumer electronics and semiconductors will lead to an acceleration of corporate spending on computers and information-technology gear next year.

``The economy has been driven mostly by the consumer market, and IT spending has been more modest, but we're already seeing signs of pent-up demand,'' Barnholt said in an interview. Agilent is the world's biggest maker of testing equipment.

Texas Instruments Inc., whose semiconductors run more than half the mobile phones sold last year, said this week that sales in the fourth quarter will reach the highest level in three years. The improvement is driven by increased demand for the newest mobile phones with cameras and MP3 audio players.

The few areas of weakness in November sales included department stores and grocery stores, which may have been restrained by the ongoing strike by around 70,000 employees in California and three other states. Department stores sold 1.1 percent less merchandise.

Holiday Shopping

Total sales during the holiday shopping period are forecast by the National Retail Federation to rise 5.7 percent this year as the economy improves and stock prices rise.

``Business is very strong, well ahead of last year,'' Lew Frankfort, chief executive of luxury leather goods maker Coach Inc., said in an interview Monday. ``And we're going to see growth that will carry over into 2004.''

Receipts at service stations rose 1.6 percent last month after a 1.9 percent decline in October. Excluding cars and gasoline, sales rose 0.3 percent last month, after a 0.6 percent rise.

Consumer confidence is improving as the economy adds jobs, a sign that spending will pick up heading into 2004.

A 3.6 percent annualized increase in spending in the first three months of 2004 will help the economy grow at a 4.2 percent annual pace, according to the median estimate of economists surveyed by Bloomberg News. The economy will expand at a 4 percent pace this quarter, the survey showed.

Third Quarter

Spending rose at a 6.4 percent annual rate in the July- September quarter. The third quarter's pace was the strongest in six years, government figures showed. The pace is likely to slow this month as a result.

Consumer confidence rose last month to the highest since September 2002, the Conference Board said. The economy added 57,000 jobs in November, the fourth consecutive increase, and the unemployment rate dropped to 5.9 percent, the lowest since March, statistics from the Labor Department last week showed.

Consumer spending may also get a boost from the up to $40- billion worth of tax refund checks that will be mailed out early next year, said Robert Mellman, an economist at J.P. Morgan Securities Inc. in New York.