December 2011 retail sales show growth, according to Commerce and NRF data

Spurred to a large degree by a decent holiday shopping season, December retail sales showed sequential and annual growth, according to data released by the United States Department of Commerce and the National Retail Federation (NRF).

Commerce reported that December retail sales at $400.6 billion were up 0.1 percent from November and up 6.5 percent annually, with total 2011 retail sales up 7.7 percent from 2010. When excluding autos, December retail sales at $328.7 billion were down 0.2 percent from November and up 6.0 percent annually, with total 2011 retail sales, excluding autos, up 7.3 percent over 2010.

And the NRF reported that December retail sales, which exclude autos, gas stations, and restaurants, were up 4.1 percent unadjusted annually and down 0.6 percent seasonally adjusted from November. The NRF also noted that 2011 holiday retail sales—November and December combined—were up 4.1 percent at $471.5 billion, topping previous estimates of 3.8 percent growth.

“In a matchup between the final two months of 2011 November clearly wins, but in the end retailers’ promotions struck the right chord for budget-focused holiday shoppers,” said NRF Chief Economist, Jack Kleinhenz in a statement. “Though we are seeing evidence that the economy still has a critical hold on consumers’ purchase decisions, this strength in spending could continue into 2012.” 

While retail sales continue to show slow growth, many industry experts still maintain that evidence of growth is needed over a longer period of time, considering that consumer spending represents about 70 percent of U.S. economic activity.

And as LM has reported, in conjunction with flat or minimally growing retail sales is an ostensible stalling in freight growth to a certain degree as evidenced by recent reports from the American Trucking Associations and Cass Information Systems. Reports in recent months from both concerns show that freight growth is in a holding pattern to a large degree.

A major driver of these relatively slight sequential retail sales increases is that with relatively flat retail spending occurring overall, retailers are postponing their commitments and are waiting until the economic outlook becomes clearer, while they are risking stock outages by having very lean inventories.

What’s more, while retail sales are growing slightly, they are not providing enough of a bump to signal a material increase in economic output.

“In retrospect, the Holiday Season, while slightly positive, did not give signs of a lasting recovery in consumer confidence or spending,” said Charles W. “Chuck” Clowdis, Managing Director, Transportation Advisory Services, at IHS Global Insight, in an interview. “This is also reflected in the leveling of tonnage and also transport providers’ very cautious outlook for the first half of 2012. We do not see an overaggressive inventory restocking in the first quarter. Motor carrier pricing increases likely will be slowed and a closer watch on diesel prices is prudent for shippers to be ever mindful of the cost impact of fuel surcharges.”

And FTR Associate Senior Consultant Larry Gross said that while holiday retail sales were decent, there was not a late in-the-year meaningful inventory replenishment occurring as a result of these sales.

Gross explained that the “final chapter” on the holiday shopping season was that it was OK but not “a barnburner,” with some winners and losers. The e-commerce sector, he said, was very robust throughout the holiday shopping season, which is likely to be reflected in package volume data released in the coming weeks by FedEx and UPS.