December retail sales finish 2016 on a high note

It appears that holiday shoppers did their best to support the economy over the home stretch of 2016 as retail sales for the month of December showed gains, according to data issued by the United States Department of Commerce and the National Retail Federation (NRF).

Commerce reported that December retail sales were up 0.6 percent compared to November and up 4.1 percent annually at $469.1 billion. For all of 2016, Commerce said total retail sales saw a 3.3 percent annual increase, with sales form October through December up 4.1 percent annually compared to the same period in 2015. 

Retail trade sales saw a 4.3 percent annual gain and were up 0.8 percent from November to December. And non-store retailers were up 13.2 percent annually, likely due to increased e-commerce activity.

The NRF reported that retail sales, excluding automobiles, gas stations, and restaurants, were up 0.2 percent on a seasonally-adjusted basis from November to December and 3.2 percent on an unadjusted basis compared to December 2015.

And for holiday sales, which NRF defines as retail sales during the months of November and December, NRF said there was a 4 percent gain to $658.3 billion, including $122.9 billion in non-store sales, which were up 12.6 percent annually. The total holiday sales number came in ahead of the NRF’s original forecast of $655.8 billion, and the NRF said this signals a strengthening economy, with consumers spending more than expected. The forecast is based on an economic model that uses several different types of indicators, including consumer credit, disposable personal income, and previous monthly sales releases.

“The economy was clearly stronger in the fall and consumers were more active during the holiday season than they had been earlier in the year,” NRF Chief Economist Jack Kleinhenz said. “Economic indicators were up, retailers offered great deals, confidence improved and all of that empowered consumers to spend more.”
The NRF also executive also cited various data points driving retail sales gains, including:

• hourly earnings were up in 2016 over 2015;
• job gains remained strong and unemployment, although up slightly in December from November, remained low;
• home values have also increased;
• and the rising stock market has increased the value of consumers’ investments

“Consumers turned out in force this holiday season, and with solid December and November sales that were stronger than first estimated, 2016 holiday retail sales grew 4.0% over the year before,” wrote Chris G. Christopher, Jr.,Director Consumer Economics, IHS Global Insight, in a research note. “Consumer mood was bright after the presidential election and ensuing stock market rallies. Consumer confidence soared in December to the highest level since August 2001. Looking forward, real consumer spending will remain relatively robust into the next year, supported by rising employment, real disposable income, and household net worth. Household finances are in good shape, thanks to gains in both home prices and stock prices, along with debt deleveraging.”