Retail Sales Indicate Good Holiday Season

It was a very good holiday shopping season but perhaps not a great one. Retail sales rose a solid 0.4 percent in December which is just shy of Econoday's consensus though November is revised 1 tenth higher to what is a standout gain of 0.9 percent. Core readings show similar strength with all pointing to a solid consumer contribution to fourth-quarter GDP.

Nonstore retailers, a component which e-commerce dominates, did in fact have a great season. Sales here rose 1.2 percent in December on top of November's 4.2 percent surge. These gains no doubt came at the expense of brick-and-mortar boxes as general merchandise inched only 0.1 percent and 0.3 percent higher in the two months with the sub-component for department stores down a very noticeable 1.1 percent in December. Clothing stores are another December disappointment, falling 0.3 percent and reflecting price discounting as evidenced in the apparel reading of this morning's consumer price report.

But furniture stores had a very good season with December and November gains of 0.6 percent and 0.5 percent. And in further evidence of housing strength, building material sales jumped 1.2 percent in December following November's 0.5 percent gain. Restaurants are also positive with December and November gains of 0.7 and 0.5 percent. Vehicle sales rose 0.2 percent in December with gasoline sales unchanged.

The consumer was alive during the holidays but not unrestrained. Likely gains underway in wages along with the enormous strength in confidence and in the labor market are positives going into the 2018 economy.

Recent History Of This Indicator:
November's opening of the holiday shopping season proved very strong as retail sales showed broad strength with a 0.8 percent gain. Nonstore sales rose sharply and pointed to a fast holiday opening for e-commerce. Electronics and appliance stores along with restaurants also posted strong numbers that speak to discretionary strength. Retail sales in December are expected to rise a solid 0.5 percent with ex-auto sales at 0.4 percent. Two core readings -- less auto & gas and control group sales -- are expected to post respective increases of 0.4 and 0.3 percent.