Advertisement

December Sales Ring Up a 1.2% Increase

Share via
From Reuters

U.S. retail sales jumped a larger-than-expected 1.2% in December as lower gas prices left shoppers with more cash to spend, while cheaper oil also pulled down import prices more than anticipated, government reports showed Thursday.

But a mixed bag of economic data also showed first-time claims for jobless benefits increased unexpectedly in the latest week.

The rise in retail sales in December from November was fueled by strong sales at auto dealers, furniture stores and online retailers, a Commerce Department report said. Retail sales for all of 2004 jumped 8% from the year before, the biggest gain since 1999.

Advertisement

Excluding autos, which can swing sharply from one month to the next, retail sales rose 0.3%, slightly less than expected. Compared with the same month a year ago, December retail sales excluding autos grew 8.6%.

Analysts had been expecting a 1% rise in December retail sales and a 0.4% gain excluding autos.

“Consumers for now remain willing to spend freely, sustaining the U.S. expansion. Given that attitude, the Fed remains likely to continue boosting the Fed funds rate at upcoming meetings,” said UBS economist Maury Harris.

Advertisement

November sales rose 0.1%, with sales excluding autos up a revised 0.4%, originally reported up 0.5%.

Sales of motor vehicles and parts in December jumped 4.3%, while furniture stores reported a 2.2% gain. Non-store retailers such as online vendors and mail-order catalogs showed a 1.9% rise in sales.

U.S. drivers were paying approximately 25 cents less per gallon of gas in late December than in October, a nationwide survey showed this week.

Advertisement

Economists view retail sales as a dominant component in consumer spending, which in turn makes up two-thirds of U.S. economic output.

Meanwhile, the number of Americans filing initial claims for jobless pay grew unexpectedly last week to 367,000, the highest since late September, the Labor Department reported. However, the number of those continuing to file claims fell sharply to their lowest level since mid-2001.

A separate Labor Department report showed that the price of goods imported into the United States fell by a much more than expected 1.3% in December. The large drop in import costs was driven by a steep fall in the price of petroleum products, which dived 11.5% after a revised 5.7% decline the previous month.

Advertisement