U.S. retail sales posted another strong month to end 2016, powered by strong demand for autos and a jump in spending by online shoppers.
The Commerce Department said retail sales increased 0.6% last month after rising 0.2% in November. Sales were up 4.1% from December 2015 and rose 3.3% for all of 2016, up from 2.3% in 2015.
“American consumers remain remarkably resilient, and after a slow start to the holiday season, retail sales picked up momentum,” Craig Johnson, president of consulting firm Customer Growth Partners, told The Wall Street Journal.
A separate report from the National Retail Federation showed holiday sales rose 4% in November and December, compared with the same period a year earlier. Two-thirds of all U.S. output goes to goods and services consumed by U.S. households, making the pace of consumer spending a key gauge of economic vitality.
A 2.4% jump in auto sales accounted for much of the rise in retail sales in December as shoppers took advantage of big discounts offered by the auto industry. “The strategy largely worked, with the late-year surge lifting auto sales to another annual record,” the WSJ noted.
Sales at building material stores and at furniture shops increased 0.5% while sales at online retailers jumped 1.3% last month after gaining 0.3% in November.
Consumers “are shopping at a rate not seen since the mid-2000s — just not so much at the mall,” Johnson said.
According to the Journal, consumer spending benefited as worker wages grew more quickly over the past year after a long period of stagnant growth. At the same time, living costs — particularly for everyday items such as gasoline — continue to grow modestly, giving people more money for shopping and travel.
Looking ahead, Paul Ashworth, chief U.S. economist at Capital Economics, told Reuters that there was “no reason to suspect that consumption growth is going to weaken in the first half of this year. Particularly not when households will be anticipating a potentially big decline in tax rates at some point this year.”