Greater con­fi­dence lifts U.S. re­tail sales

The Reporter (Lansdale, PA) - - BUSINESS - By Christo­pher S. Rugaber AP Eco­nom­ics Writer

WASHINGTON» Amer­i­cans stepped up their auto buy­ing and on­line shop­ping in De­cem­ber, re­flect­ing a boost in con­fi­dence af­ter the elec­tion and a solid in­crease in pay.

Re­tail sales rose a sea­son­ally ad­justed 0.6 per­cent, fol­low­ing a small 0.2 per­cent gain in Novem­ber, the Com­merce Depart­ment said Fri­day.

Most of the strength was in auto sales, which jumped 2.4 per­cent in De­cem­ber, the big­gest gain since April. Gas sta­tion sales rose 2 per­cent, largely be­cause of higher prices. Ex­clud­ing au­tos and gas, re­tail sales over­all were flat.

Some econ­o­mists were dis­ap­pointed by that fig­ure and said it sug­gested that many con­sumers re­main cau­tious.

“Re­tail sales ap­pear healthy enough, but look­ing past the head­line there are a few con­cerns about the strength of con­sumer spend­ing,” said Paul Ash­worth, an econ­o­mist at Cap­i­tal Eco­nom­ics. Yet “with con­sumer con­fi­dence surg­ing to multi-year highs af­ter the elec­tion and wage growth still solid, there is no rea­son to sus­pect that con­sump­tion growth is go­ing to weaken in the first half of this year.”

And there were other ar­eas of strength out­side au­tos. On­line re­tail­ers in par­tic­u­lar re­ported bet­ter sales. Home and gar­den cen­ters, fur­ni­ture stores and sport­ing goods re­tail­ers also saw sales grow.

The healthy spend­ing was likely fu­eled by soar­ing con­sumer con­fi­dence, which has jumped af­ter the elec­tion to the high­est level in

nearly a decade. Small busi­nesses are also more bullish. And Amer­i­cans’ pay­checks are get­ting fat­ter: Av­er­age hourly pay rose 2.9

per­cent in De­cem­ber from a year ear­lier, the most in seven years.

Ear­lier this month, au­tomak­ers re­ported that sales reached a record high of 17.6 mil­lion in 2016. With in­ter­est rates ris­ing, how­ever, many in­dus­try ex­perts fore­cast that sales

will plateau and pos­si­bly slip this year.

The data re­flected the on­go­ing strug­gles of tra­di­tional brick-and-mor­tar re­tail chains as In­ter­net mer­chants gob­ble up more mar­ket share. Depart­ment store sales fell 0.6 per­cent and elec­tron­ics and ap­pli­ance

stores re­ported a 0.5 per­cent drop.

Yet sales jumped 1.3 per­cent in a cat­e­gory that mostly con­sists of on­line re­tail­ers but also in­cludes cat­a­log com­pa­nies. For all of 2016, on­line sales jumped 13.2 per­cent, three times the gain of all re­tail sales.

Those trends were sharply in fo­cus in the past two weeks as cloth­ing re­tailer The Lim­ited an­nounced that it would close all 250 of its stores, cost­ing 4,000 jobs. That fol­lowed depart­ment store chain Macy’s de­ci­sion to close 68 stores and cut 10,000 jobs. Sears also said last week that it would close an­other 150 stores.

Ama­zon, mean­while, said Thurs­day that it would add 100,000 jobs over the next 18 months as it ex­pands its ware­house and lo­gis­tics ca­pa­bil­i­ties.

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