Retail Sales Up 1.9% During Yule Season, 6.3% for Year : Increase Lags Behind 10.5% Jump of 1984

Retail sales rose 1.9% during December’s Christmas season and were up a total 6.3% for 1985, the Commerce Department reported today.

While the sales gain for 1985 was a healthy increase, it lagged behind the big 10.5% jump registered in 1984.

At the White House, spokesman Larry Speakes called today’s report “exceptionally good news” and added:

“With sales booming and the unemployment rate at its lowest level since 1982, the health of the nation’s economy can be readily observed by even the most casual observer.”

Growth Only Moderate

But analysts said that, although the report proved that consumers did increase their spending during the holidays, the advance represents only moderate growth and that it is too early to dub the improvement an economic turnaround.

The strength last month was centered in auto sales, which posted a November-to-December rise of 5.7% as manufacturers reinstituted attractive cut-rate financing deals to spur sales.

The rise in auto sales accounted for more than half the overall increase in retail sales last month. Without the auto gain, sales would have risen 0.9%, the department said.

Commerce Secretary Malcolm Baldrige noted that the 0.9% increase marked the sixth consecutive month that non-auto sales have risen.

‘Healthy Gain’ Seen

He said the December increase put sales 1.5% ahead of their average for the final three months of the year, a sign that “retail sales should begin the year with a healthy quarterly gain.”

Sales totaled $117.9 billion in December after a 0.7% sales advance in November. Retail sales had slumped a sharp 3.9% in October as auto sales plummeted after auto makers ended their first round of cut-rate financing incentives. Manufacturers began using financing offers again last month to spur lagging sales.

The report confirmed a survey last week that sales at the nation’s department stores were up moderately during the Christmas season.

The commerce report said sales at general merchandise stores, a category which includes department stores, rose 0.3% in December after seasonal adjustment. This advance followed a much stronger 1.7% November increase.

New Cars, Fewer Gifts

Department store executives said their sales were held back because consumers bought new cars this year and had less money to spend on Christmas presents.