December retail sales mostly show growth

Last Friday, December 2015 retail sales results were issued by the United States Department of Commerce and the National Retail Federation.

I am a little late to the retail sales number party this time, because I was on the road late last week, but the numbers themselves are far from stale and are certainly worth sharing.

The Department of Commerce reported that December retail sales fell 0.1 percent compared to November at $448.1 billion or, in other words, were essentially flat.  And compared to December 2014 retail sales, December 2015 was up 2.2 percent, with total retail sales from October 2015 through December 2015 up 1.8 percent annually. Full-year 2015 retail sales saw a 2.1 percent annual gain.

As for the NRF’s numbers, the organization reported that December retail sales, which exclude automobiles, gas stations, and restaurants, dropped 0.2 percent on a seasonally-adjusted basis compared to November and up 3.1 percent on an annual basis. 

The month of December’s retail sales, though, is not the only key metric that was issued by the NRF. It also reported final holiday retail sales (the months of November and December combined) saw a 3 percent annual gain to $626.1 billion.

While that holiday sales growth is nothing to scoff at, coupled with the NRF describing it as solid growth in spite of unforeseen weather events across the country and an extreme deflationary environment, it is down from its forecast that called for total holiday season retail sales growth of 3.7 percent. 2015 holiday retail sales were down compared to 2014, which saw a 4.1 percent annual increase over 2013.

NRF Chief Economist Jack Kleinhenz was clear in assessing the holiday and December retail sales data in a blog posting.

“A double whammy of deflation and December weather constricted holiday sales growth as well as consumer spending,” he explained. “The results of December’s retail sales remind us just how significant of an impact unusual weather can have on retail and overall economic activity. While the timing is uncertain there are positive prospects for improvement, including recent job gains that will help lift income and earnings and a healthy housing market that should provide some support for spending in various retail sectors.”

While weather in certain parts of the country was an issue during holiday shopping season, it also was not the sole issue people were focused on.

Ever-growing online shopping numbers, for one, continue to redefine the retail supply chain for all seasons and that was again on full display. That is apparent and not in dispute by anyone; it is only going to continue to head in one direction, too: up.

Along with that is the price of fuel, which continues to check in at record-lows on a weekly basis, it seems. The working thesis heading into holiday sales season was that consumers would increase their spending in the holiday season with more money to spend, due to lower gasoline prices. But that did not entirely play out as expected, with more consumers opting to pay down debt instead.

And as previously reported in this space, holiday sales growth occurred concurrently with still-high inventory levels that continue to weigh on retailers and figured lead to heavy discounts and sales upon completion of the holiday shopping season.

NRF Vice President, Supply Chain Jonathan Gold said in the December edition of the Global Port Tracker Report issued by NRF and Hackett Associates that retailers went into the season with strong inventories that ensured consumers would have a good depth and breadth of selection, and were expected to hold true for the remainder of the season.

These mostly underwhelming retail sales numbers to finish 2015 are in line with a whole host of economic warning signs that are not expected to abate soon. These signs include a strong dollar impacting U.S. exports, China’s economic slump and potential subsequent impact on the global economy, a tough start to 2016 so far for Wall Street, a manufacturing slowdown, and mostly stagnant GDP growth.

I apologize for such a “bummer-list” of economic headwinds, but these are facts. Hopefully as the year moves on, we can begin scratching these things off the list, assuming more things don’t get added to it.