Retail Spending Grew Strongly at Year’s End in December

Retail spending grew 0.4 percent in December, extending the robust gains seen in the prior three months and ending the year on a strong note. These data show that consumers have increased their spending of late, especially relative to the slower growth in the summer months, with robust holiday spending overall. Indeed, retail sales have risen by a healthy 5.4 percent year-over-year rate in December—a strong figure, even with some easing from the 6.0 percent pace seen in November. For comparison purposes, the year-over-year rate was 3.8 percent in December 2016. Excluding automobiles, the pace was even stronger, with retail sales up 6.3 percent over the past 12 months, its best year-over-year rate in five years.

Retail spending data were mixed but mostly higher in December. The largest increases were seen in the following categories: building material and garden supply stores (up 1.2 percent), nonstore retailers (up 1.2 percent), food services and drinking places (up 0.7 percent), furniture and home furnishings stores (up 0.6 percent), food and beverage stores (up 0.5 percent) and health and personal care stores (up 0.4 percent). In contrast, there were reduced monthly sales for miscellaneous store retailers (down 2.9 percent), sporting goods and hobby stores (down 1.6 percent), department stores (down 1.1 percent), clothing and accessories stores (down 0.3 percent) and electronics and appliance stores (down 0.2 percent). It is perhaps notable that nonstore retailers experienced strong growth in December, with department stores suffering sizable declines in sales. This further illustrates the tension between brick-and-mortar and online sales operations.

Over the past 12 months, the fastest growth in retail sales were in the following segments: nonstore retailers (up 12.7 percent), building material and garden supply stores (up 9.9 percent), furniture and home furnishings stores (up 9.9 percent), gasoline stations (9.1 percent) and electronics and appliance stores (up 6.5 percent). Regarding the structural shifts conversation mentioned in the previous paragraph, department store sales edged up just 0.5 percent year-over-year. Gasoline stations benefited from higher prices, with recent hurricanes buoying home improvement and motor vehicles activity.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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