Retail sales in the U.S. rose more than projected in December as Americans wrapped up their holiday shopping, showing households looked beyond the year-end budget battle among U.S. lawmakers.
The 0.5 percent gain followed a revised 0.4 percent increase in November that was more than previously reported, Commerce Department figures showed today in Washington. The median forecast of 83 economists surveyed by Bloomberg called for a 0.2 percent rise. Sales excluding automobiles and gasoline climbed 0.6 percent for a second month.
Consumer spending, which accounts for about 70 percent of the economy, was boosted by an improving labor market, growth in incomes and discounting by chains such as Macy’s Inc. that may help sustain demand this year. At the same time, households may be hard-pressed to accelerate purchases as higher payroll taxes cut into take-home pay starting this month.
“The consumer actually is doing okay,” Michael Gapen, a New York-based senior economist at Barclays Plc, said before the report. “The unemployment rate is trending lower, there’s moderate income growth, and equity and home price gains are helping. Spending will continue to grow though it’ll be soft in the first half.”
Estimates in the Bloomberg survey ranged from a drop of 0.3 percent to a gain of 0.8 percent. The reading for November was revised from an initially reported increase of 0.3 percent.
Nine of 13 major categories showed gains last month, led by a 1.6 percent rise at auto dealers and a 1.4 percent increase at furniture stores. The back-to-back gains in purchases excluding cars and gasoline were the strongest in almost a year.
For all of 2012, retail sales climbed 5.2 percent after a 7.9 percent gain in 2011, today’s Commerce Department report showed.
In December, sales rose at motor vehicle and parts dealers after a 2.7 percent surge the prior month, today’s report showed.
General Motors Co. and Ford Motor Co., the two largest automakers by U.S. sales, exceeded analysts’ estimates and forecast total deliveries will keep rising in 2013. Cars and light trucks sold at a 15.3 million annual pace in December after 15.5 million in November, the best two months since early 2008, according to data from Ward’s Automotive Group.
“Both the economy and the industry have a bit underlying momentum that we expect to continue,” Mark Reuss, president of GM North America, said on a Jan. 3 conference call with analysts. “With the fiscal cliff concern somewhat out of the way, I think we’ll see people beginning to make more decisions knowing what the tax status is.”
Retail sales excluding autos increased 0.3 percent after falling 0.1 percent, today’s report showed. They were projected to rise 0.2 percent, according to the Bloomberg survey median.
Spending increased 1 percent at clothing chains and 0.3 percent at department stores, today’s report showed. Sales at restaurants and bars climbed 1.2 percent for a second month.
Retailers attracted shoppers with last-minute discounts on holiday gifts. Macy’s, Gap Inc. and Nordstrom Inc. reported December same-store sales that topped analysts’ estimates. A boost to household wealth from stock market gains and rising home values also is helping underpin demand.
Filling-station sales dropped 1.6 percent, as cheaper gasoline held back receipts. The Commerce Department’s retail sales data aren’t adjusted for prices. A gallon of regular gasoline at the pump averaged $3.30 in December, the lowest level in a year and down 14 cents from a month earlier, according to AAA, the biggest U.S. motoring group.
Purchases excluding autos, gasoline and building materials, which are the figures used to calculate gross domestic product, climbed 0.6 percent after a 0.5 percent increase in the previous month.
The fiscal pact passed by Congress on Jan. 1 avoided sweeping tax increases and made permanent the George W. Bush-era income-tax cuts for 99 percent of Americans. At the same time, the agreement let the payroll tax used to pay for Social Security benefits return to the 2010 level of 6.2 percent, from 4.2 percent. That reduces the paycheck by $41.67 for someone who earns $50,000 and gets paid twice a month.
The burden of the payroll tax increase may fall more on lower-income households. Dollar General Corp., the largest dollar-store chain, said it expects consumers to spend more cautiously this year, spurring it to match rivals’ price cuts on popular items such as coffee and cereal. Family Dollar Stores Inc., the second-largest U.S. dollar-store chain, reported weaker profit margins and cut its full-year forecast.
Better job and wage prospects will cushion some of the hit. Payrolls rose by 155,000 workers last month after a 161,000 advance in November, and the unemployment rate held at 7.8 percent, matching the lowest since December 2008. Hourly earnings climbed 0.3 percent on average for a second month, the biggest back-to-back gain since the economic recovery began in mid-2009.
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