December retail sales signal disappointing end to 2016

Dive Brief:

Total retail sales for December, adjusted for seasonal variation and holiday and trading-day differences (but not for price changes), reached $469.1 billion, up 0.6% in the month, the U.S. Department of Commerce said Friday.
December growth fell short of expectations for an 0.8% gain, according to economists polled by MarketWatch. Moreover, the numbers were largely buoyed by strong automobile sales: Core retail sales — excluding automobiles, gasoline, building materials and food services — rose just 0.2% in the month, and November retail sales were revised upward from 0.1% to 0.2%.
E-commerce retailers were a bright spot over the holiday month, reporting sales increases of 1.3% in December and 13.2% over the year-ago period.

Dive Insight:

The muted monthly retail sales report mirrors the same disappointment that many department stores like Macy’s and J.C. Penney felt rounding out the year. Despite record-setting holiday sales between Black Friday and Christmas (especially in e-commerce), clothing and accessories store sales remained flat, and electronics and appliance store sales fell 0.5% in December. Meanwhile, furniture and home stores experienced a 0.5% rise and sporting goods stores suffered a 0.2% increase.

“These numbers show that the nation’s slow-but-steady economic recovery is picking up speed and that consumers feel good about the future,” NRF President and CEO Matthew Shay said in a press release sent to Retail Dive. “Retail mirrors the economy. And while there might have been some bumps in the road for individual companies, the retail industry overall had a solid holiday season and retailers will work to sustain this in the year ahead.”

The economy was certainly stronger in the fall of 2016 than in earlier months, 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.”

Moreover, consumer confidence has soared to the highest levels in nearly a decade since November's U.S. Presidential election, and rising wages signal a positive outlook on the economy in 2017: Average hourly pay rose 2.9% in December from a year earlier, the most in seven years, Associated Press reports.

"The healthy growth in holiday sales this year was despite a very weak showing by the Department Store sector, which declined 8.4% year over year and 0.6% from November," Mickey Chadha, Moody's vice president/senior credit officer, said in a statement emailed to Retail Dive. "As we expected, consumers were feeling better this holiday season as unemployment has ticked down and wages are finally starting to creep up, creating a positive momentum in overall sales towards the higher end of our 3% - 4% holiday sales forecast.”