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Holiday gift for retailers; sales up a solid 0.4 percent

13 January 2018

U.S. retail sales rose 0.4% the final month of the year after a 0.9% increase in November, the U.S. Department of Commerce said Friday.

Looking at specific categories, December sales and overall 2017 retail sales were a mixed bag.

Electronics sales, which had been relatively flat for most last year, "ended the year with a flourish", he also noted.

Meanwhile, the report said core consumer prices, which exclude food and energy prices, increased by 0.3 percent in December after ticking up by 0.1 percent in November.

Both December's increase in retail sales and the strong upward revision to November data strengthens economists' expectations of an acceleration in consumer spending for the fourth quarter. Consumer spending, which makes up for over two-thirds of USA economic activity, increased at a 2.2 percent annualized rate for the third quarter.

Department store sales were also on the weak side, edging higher by just 0.1% to $58.6bn.

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The season got off to a strong start, with roughly 70 percent of Americans reporting that they went shopping - either online or in person - over Thanksgiving weekend. Nonstore retailer sales are up 12.7% year-over-year as online retailers continue to grow their market share. Home and furniture stores saw 7.5% year-over-year growth, thanks in part to a robust housing market, as well as more gifting of home products, according to GlobalData Retail Managing Director Neil Saunders. Retailers closed a record 7,000 USA stores previous year, while dozens of big-name companies, including Gymboree, RadioShack and BCBG Max Azria, filed for bankruptcy.

Clothing and accessories stores were up 2.7 percent. They were previously reported to have gained 0.8 percent in November.

Friday's results exceeded the holiday forecast by the National Retail Federation of between $678.8 billion and $682 billion, which would have been a rise of 3.6 percent to 4 percent.

Consumers cut spending at department stores, with sales dropping 1.1 percent last month, while sporting goods fell.5 percent year-over year.

"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. Consumer spending accounts for about 70 percent of US economic output. The economy grew at a 3.2 percent pace during that period.

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

Holiday gift for retailers; sales up a solid 0.4 percent