Retail sales finish 2017 with momentum, says Commerce and NRF

Retail sales finished 2017 with strong momentum in December, according to data issued today by the United States Department of Commerce and the National Retail Federation (NRF).

Commerce reported that December retail sales saw a 0.4% increase from November to December at $495.4 billion along with a 5.4% annual gain. And from October through December, retail sales were up 5.5% annually, with total 2017 retail sales up 4.2% compared to 2016.

Some of the top-performing retail segments in December, based on Commerce’s data, were: retail trade sales up 0.3% from November and up 5.6% annually; nonstore retailers (which includes e-commerce) headed up 12.7% annually, and building materials and garden equipment and supplies dealers climbed 9.9%.

NRF reported that December retail sales increased 0.4% on a seasonally adjusted basis compared to November and were up 4.6% annually on an unadjusted basis.

Holiday sales, which NRF defines as the months of November and December, saw a 5.5% annual gain to $691.9 billion. NRF cited various factors for the increase, including: growing wages; stronger employment; and higher consumer confidence. It explained that these things led to higher consumer spending levels than had been originally expected. The $691.9 billion tally, excludes restaurants, automotive dealers, and gas stations, and includes $138.4 billion in online and other non-store sales, which saw an 11.5% increase.

What’s more, the holiday sales number topped the original NRF forecast of between $678.75 billion and $682 billion, which it said would have represented a gain between 3.6% and 4% and been the largest increase since 2010’s and was ahead of 2010’s 5.2% increase.

“The economy was in great shape going into the holiday season, and retailers had the right mix of inventory, pricing and staffing to help them connect with shoppers very efficiently,” NRF Chief Economist Jack Kleinhenz said. “Strong employment and more money in consumers’ pockets along with the news of tax cuts clearly helped with the pace of shopping. The market conditions were right, retailers were doing what they know how to do, and it all worked. We think the willingness to spend and growing purchasing power seen during the holidays will be key drivers of the 2018 economy.”

Chris Christopher, Executive Director, US and Consumer Markets, IHS Markit, was bullish December retail sales data.

“Retail gains in December were broad based; November nonstore (mostly online) sales were revised up considerably and December’s sales exceeded expectations,” he stated. “Department stores, sporting, clothing, electronics, and miscellaneous fell into negative territory in December—most likely due to holiday shoppers shifting away from the bricks and onto the clicks. 2017 holiday retail sales growth beat our expectation coming in at 5.5%—the strongest holiday season since 2005. We define holiday retail sales as not seasonally adjusted November plus December total retail sales less gasoline stations, auto dealerships, and restaurants. Today’s strong report raised our estimate of Q4 GDP growth three-tenths to 2.6% (revised up further to 2.7% after folding in this morning’s CPI report) and our forecast of Q1 GDP growth two-tenths to 2.4%.”