U.S. retail sales rose 0.3 percent in December, in line with what most economists were expecting, but department stores fared worse than their specialty peers.
On Thursday, the U.S. Census Bureau disclosed the tally for seasonally adjusted December retail sales, which also indicated a 5.8 percent jump over December 2018. Excluding food services, automobiles, gasoline and building materials, retail sales rose 0.5 percent in December. The Commerce Department also revised November figures, now up 0.3 percent instead of the initial up 0.2 percent reported last month.
By segment, when compared with year-ago figures, department store sales plunged 5.5 percent. The general merchandise category includes department stores, as well as warehouse clubs and supercenters. Apparel, accessories and footwear retailers were up 0.1 percent year over year. The big jump came from the nonstore retailers category, including e-commerce sites, which posted a 19.2 percent gain in sales from December 2018.
The report for December 2019 essentially confirms what economists have said for much of 2019 about how the consumer is driving economic growth, or at the very least keeping it steady. And when compared with November 2019 data, U.S. retail sales saw sequential gains in the brick-and-mortar channel. Department stores slipped just 0.8 percent in December from November, while sales at apparel, accessories and footwear retailers advanced 1.6 percent. Online retailers saw a sequential improvement of just 0.2 percent.
“We continue to expect that increased consumer confidence, wage growth, low unemployment and the continued GDP growth in the U.S. will result in 2020 retail sales growth of over 3.5 percent led by e-commerce players like Amazon, off-price retailers like TJX and Ross, value and convenience oriented retailers like Dollar General and Dollar Tree, and discounters and warehouse clubs like Walmart and Costco,” Mickey Chadha, Moody’s vice president and credit analyst, said.
“The consumer remains the linchpin to growth,” Jack Kleinhenz, chief economist for the National Retail Federation, said. He spoke at NRF’s Big Show on Monday at the Jacob K. Javits Convention Center in Manhattan before the Commerce Department released its retail sales report.
Because wage growth in some sectors has risen 3 percent to 4 percent and people are feeling both confident and secure about their jobs and income prospects, Kleinhenz told attendees that he believes the “consumer has the ability to spend vis-a-vis their income.”
Following the retail sales report Thursday, NRF said holiday retail sales in 2019 for November and December grew 4.1 percent to $730.2 billion. The tally excludes automobile dealers, gasoline stations and restaurants, but it includes the 14.6 percent rise–to $167.8 billion–in online and other nonstore sales. NRF had forecasted in October that the range for the period would increase between 3.8 percent to 4.2 percent.
The 2019 growth rate was nearly double the 2.1 percent gain during 2018’s holiday season, buffeted by a partial government shutdown, stock market volatility and interest rate hikes.