Published: Sat, January 13, 2018
Finance | By Loren Pratt

USA retail sales rise in December, capping a strong year in spending

USA retail sales rise in December, capping a strong year in spending

The gains by retail stocks came following the retail sales data as well as a report from the National Retail Federation showing stronger than expected holiday sales growth.

"We aren't sure who gets the credit for the strongest advance in consumer spending since 2010, but it is likely tied in part to the massive tax cuts from Washington and perhaps the Fed's easy money too-low interest rate policy for this stage of the business cycle with the economy in its ninth year of expansion from the end of the recession", said Chris Rupkey, chief financial economist at MUFG Union Bank in NY, in a note to clients Friday.

A separate reading of the season showed sales rose 5.7 percent in November and December combined, the best holiday period since 2005, said Craig Johnson, head of research firm Customer Growth Partners.

According to the National Retail Federation, holiday sales in the November/December timeframe increased 5.5% over the same period in 2016 to $691.9 billion. NRF had forecast that non-store sales, which include online sales, would grow between 11% and 15% to between $137.7 billion and $142.6 billion.

"We knew going in that retailers were going to have a good holiday season but the results are even better than anything we could have hoped for", NRF President and CEO Matthew Shay said.

GlobalData Retail managing director Neil Saunders cited these factors: Consumer confidence at 17-year highs, steady wage growth of about 3 percent, the booming stock market, and the robust housing sector. "With this as a starting point and tax cuts putting more money into consumers' pockets, we are confident that retailers will have a very good year ahead".

Shepherdson also pointed out the sharp 0.4% net upward revision to non-automobile sales for October and November, which he expected would trigger upward revisions to estimates of household consumption for the final three months of 2017.

Start your workday the right way with the news that matters most. "We think the willingness to spend and growing purchasing power seen during the holidays will be key drivers of the 2018 economy", Kleinhenz said.

Retail trade sales increased 0.3% from November and 5.6% from past year. Nonstore Retailers were up 12.7% from December 2016, while Building Materials and Garden Equipment and Supplies Dealers were up 9.9% from past year.

Furniture and home furnishings stores jumped 7.5 percent. Same-store sales at department stores through December 25 declined more than 6 percent. Receipts at clothing stores declined 0.3 percent.

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