Holiday sales rose 4.1%, nation’s largest retail trade group says

The nation’s largest retail trade group says holiday sales increased 4.1%, near the top end of its forecast.

The National Retail Federation had expected growth in a range of 3.8% to 4.2% for the November and December period. The growth is nearly double the 2.1% growth seen during the holiday 2018 period, which was hurt by a government shutdown, stock market volatility and interest rate hikes.

The holiday figures, announced Thursday, follow a report from the Commerce Department that retail sales rose 0.3% in December from the previous month. Excluding sales at car dealers and gas stations, sales rose 0.5%, the best in five months.

The results offer a dose of optimism for the retail industry. Retailers have benefited from a strong economy and a tight job market, but many are struggling to adjust to an increasing shift among its customers toward online. They’re also battling the increasing dominance of online behemoth Amazon.com.

Several large stores including Kohl’s and Macy’s have reported disappointing holiday ales. Target, which has been on a winning streak, also reported a shortfall in its holiday business. A full picture of how consumers spent will be known when retailers report their fiscal fourth quarter results next month.

“This is a strong finish to the holiday season, and we think it’s a positive indicator of what’s ahead,” said Matthew Shay, president and CEO of the NRF, in a statement.

The numbers exclude sales from automobile dealers, gas stations and restaurants.

Online and other non-store sales were up 14.6% over the prior year and are included in the total.

The NRF forecast considers economic indicators such as consumer credit, disposable personal income and monthly retail sales.

December retail sales

U.S. retail sales rose at a solid pace last month, evidence that Americans were willing to spend during the winter holidays after a sluggish November.

The Commerce Department said Thursday that retail sales increased 0.3% in December from the previous month. Excluding sales at car dealers and gas stations, sales rose 0.5%, the best in five months.

Low unemployment and widespread hiring are fueling consumer confidence. Shoppers have become the primary driver of the economy’s growth as businesses have reined in their investment in machinery and equipment and exports have slowed.

Still, economists said the positive December figures were partially offset by downward revisions to October and November sales. That suggests consumer spending likely grew more slowly in the final three months of last year than previously expected.

“The December numbers look good in isolation, but they are tempered by downward revisions to prior data,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said.

Holiday shopping got off to a slow start in November, with sales excluding autos and gas actually dropping 0.2%. But sales rose in December at electronics and appliance stores, home and garden centers, grocery stores, and clothing shops.

Department stores reported a sharp 0.8% drop in sales for the second straight month, as Americans appear to be avoiding older chains. They were the only broad category other than autos to report lower sales last month.

Last year also saw shopping patterns continue to shift. Sales in a category that mostly includes online retailers soared 19.2% in 2019, nearly quadruple the 5.8% rise in overall sales. Online sales increased 0.2% in December.

Many large retailers reported disappointing results for the winter holidays. J.C. Penney, Kohl’s, Macy’s, and L Brands, the parent company of Victoria’s Secret, all reported sales declines, though Macy’s drop was less than many Wall Street analysts expected.

Target spooked much of the retail industry Wednesday when it reported a rare shortfall in holiday sales, which rose just 1.4% in November and December, down from a robust 5.7% a year earlier.

Auto sales fell 1.3% last month, the biggest decline in nearly a year, but rose a solid 4.1% in 2019.

Gas station sales jumped 2.8% in December, but the gasoline and other retail sales figures are not adjusted for price changes.