NRF: Holiday Sales Exceed Expectations

Mae Love
January 13, 2018

Retail trade sales last month were up 0.3% from November and rose 5.6% from December 2016, the U.S. Department of Commerce said on Friday.

Total sales for the 12 months of 2017 were up 4.2% from 2016.

The results topped NRF's forecast of holiday sales between $678.75 billion and $682 billion representing an increase of between 3.6% and 4%. Miscellaneous store retailers, which includes the likes of dollar stores and Walmart, lost 2.9 percent in sales in December, perhaps because of market saturation. Last month's increase in retail sales and the sharp upward revision to November data bolsters economists' expectations of an acceleration in consumer spending in the fourth quarter. Consumer spending, which accounts for more than two-thirds of US economic activity, increased at a 2.2 percent annualized rate in the third quarter. Sales at nonstore retailers, mostly online-shopping outlets, rose 12.7% on the year.

Shortly after the start of trading, the Commerce Department is scheduled to release its report on business inventories in the month of November.

Economists had expected retail sales to rise by 0.4% compared to the 0.8% increase originally reported for the previous month.

"The improving labor market, robust consumer confidence and the imminent boost to disposable incomes from the recently-enacted tax cuts suggest that spending will continue to grow at a healthy pace over the first half of this year", said Andrew Hunter, an economist at Capital Economics.

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Building materials and supplies stores increased 8.1% unadjusted year-over-year. Retailers closed a record 7,000 US stores a year ago, while dozens of big-name companies, including Gymboree, RadioShack and BCBG Max Azria, filed for bankruptcy. Receipts at clothing stores declined 0.3 percent.

Another key indicator, the U.S. Labor Department's consumer price index, rose 0.3%, the government said Friday.

The December sales growth was driven by increases in building material stores and online retailers, with both categories posting 1.2% month-over-month increases.

"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, especially given the misleading headlines of the past year", NRF President and CEO Matthew Shay said. Consumer spending accounts for about 70 percent of USA economic output.

For decades, the holiday season has been a critical time for the nation's retailers, and analysts said that was particularly true in 2017.

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