The Census Bureau reported that retail sales grew by 0.1 percent in December, their slowest pace since May. This suggests that holiday sales – despite strong Black Friday and Christmas week sales – were weaker than many might have preferred. In fact, if you were to exclude auto sales, retail sales would have fallen 0.2 percent. Nonetheless, retail sales in 2011 were 7.7 percent higher than in 2010.
Areas of strong growth in December included building materials (up 1.6 percent), motor vehicle and parts (up 1.5 percent), furniture and home furnishings (up 1 percent), clothing and accessories (up 0.7 percent) and food service and drinking places (up 0.7 percent). These were offset, though, by declines in electronics and appliances (down 3.9 percent), gasoline stations (down 1.6 percent due to lower petroleum prices) and general merchandisers (down 0.8 percent).
These numbers suggest that Americans continue to be cautious in their spending despite rising confidence and improving labor market conditions. Still, it also shows the public willing to open up its pocketbook selectively on big-ticket items such as automobiles and home improvement. Non-store retailers (up 10.6 percent) experienced the fastest year-over-year growth in retail sales; this was followed by auto dealers (up 9.5 percent), with clothing, building materials and furnishings doing well, too.
Meanwhile, the Census Bureau also released business inventory data for November, with manufacturers experiencing a 0.5 percent increase in inventories for the month. This represents a slower pace than the 0.9 percent growth rate of October. Manufacturers’ sales were unchanged in November, with the inventory-to-sales ratio edging slightly higher to 1.34 from 1.33. Overall, though, businesses have done an excellent job of inventory control of late.
For the larger economy, both sales and inventories were up 0.3 percent in November. The motor vehicle sector had the largest increase in inventories, up 0.6 percent.
Chad Moutray is chief economist, National Association of Manufacturers.