WASHINGTON – Spending at U.S. retailers rose in December for the fourth consecutive month, capping the strongest year for sales growth since 2014 and showing a continued surge in online retail sales while department-store spending slowed during a key month of the holiday shopping season.
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Retail sales -- a measure of consumer spending at stores, restaurants and websites -- increased a seasonally adjusted 0.4% in December from the prior month, the Commerce Department said Friday, matching expectations of economists surveyed by The Wall Street Journal.
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. Sales at nonstore retailers, mostly online-shopping outlets, rose 12.7% on the year.
"Definitely the consumers are in a good mood. The confidence is up. We've seen the labor market has been rather solid," said Satyam Panday, senior economist at S&P Global. "These are some positives going into 2018."
Retail sales had increased a revised 0.9% in November, and October sales growth also was revised higher. Sales in the fourth quarter as a whole increased 5.5% compared with the same period a year earlier.
Retailers had their best holiday season since 2010, according to the National Retail Federation, which on Friday reported that sales in the November-December period rose 5.5% compared with the year earlier period. This increase topped the trade group's expectations for sales excluding restaurants, automobiles and gasoline to rise 3.6% to 4%.
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Total retail sales grew 4.2% in calendar-year 2017 compared with 2016, following annual increases of 3.2% in 2016, 2.6% in 2015 and 4.3% in 2014.
Data on retail sales can be volatile from month to month, aren't adjusted for inflation and don't include spending on most services such as housing and health care.
Consumer spending is the main engine of the U.S. economy, accounting for more than two-thirds of total economic output. Consumer spending has continued to rise, supported by factors including low unemployment and rising consumer confidence, though the rate of growth has eased in recent years.
The data in Friday's report "are consistent with the very elevated consumer confidence numbers, and they imply that the saving rate, which is already very low, continues to decline," wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note to clients.
Jeremy Andrus, chief executive officer at Traeger Grills, a Salt Lake City, Utah-based maker of wood pellet grills, said Traeger's fastest-selling grill shifted from an $800 model to a $1,000 model this holiday season as consumers showed a willingness to reach deeper into their pockets.
"We see a very healthy consumer, and we see a lot of signs of the strength of that consumer," Mr. Andrus said.
Not all categories of retail fared well in December. Consumers pulled back spending at department stores last month, with sales dropping 1.1%.
Department store chain Bon-Ton Stores, Inc., announced that its comparable-store sales for the nine-week holiday period decreased 2.9%, while sales declined 6.6% in the third quarter. Bon-Ton Stores, like many other retailers, has faced challenges as customers shifted from brick-and-mortar and mall shopping toward online retailing, and The Wall Street Journal has reported the chain has considered a possible bankruptcy filing.
Gasoline-station sales were flat in December from the prior month, according to the Commerce Department report. Fluctuations in sales often reflect changes in gas prices, not volume. A gallon of regular gasoline cost $2.48 on average in December versus $2.56 in November, according to the U.S. Energy Information Administration.
Sales were uneven across other categories last month. Sales decreased from November at electronics, clothing, and sporting goods and hobby stores. Spending was up at furniture sellers, grocery stores and restaurants.
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(END) Dow Jones Newswires
January 12, 2018 12:35 ET (17:35 GMT)