US retail sales post 'solid' increase for December, economists say

According to the Department of Commerce, in seasonally adjusted terms, US retail sales volumes increased at a month-on-month pace of 0.3% in December to reach $529.6bn (consensus: 0.2%).

Last month's rise was even more pronounced if sales of automobiles and parts are stripped out, jumping by 0.7% to $423bn (consensus: 0.5%).

And November's reading for total retail sales volumes was revised up by a tenth of a percentage point.

However, November's print for the so-called 'control measure' was revised down by half a percentage point, Ian Shepherdson at Pantheon Macroeconomics pointed out.

The control measure excludes sales of food services, car dealers, building-materials stores and gasoline stations and many economists believe it to be a more accurate guide of the underlying trend.

Thus, the downward revision meant that sales in the control group were now 0.3% lower at an annualised rate, a "dramatic" slowdown from the 6.0% rise seen in the third quarter and the 7.9% leap seen in the second.

It also meant that retail sales would be a drag on overall household consumption in the fourth quarter gross domestic product figures, he said.

Nonetheless, he added, as a whole the report was "solid" and "the y/y trend in the control measure is about 4-1/4%, in line with nominal after-tax income growth, so the Q4 softness will in all probability be followed by a clear rebound in Q1."

Furthermore, said Shepherdson, the 0.2% drop in non-store sales was conspicuously weak given that the Sundays after Thanksgiving and Cyber Monday both fell in December, so upwards revisions would not come as a surprise.

By categories, Building materials and Clothing registered the biggest increases in sales, rising by 1.4% and 1.6%, respectively, while Motor vehicle and parts dealers experienced a decline of 1.3%.