Retail sales up only slightly in December
Consumers shelled out 0.2% more for retail purchases in December than in the previous month, the government said, with the final tally of the holiday season showing a solid, if unexceptional, performance.
Shoppers braved bitter cold in much of the country to spend $431.9 billion on items such as cars, clothing, gasoline and food, up 4.1% from December 2012, the Commerce Department reported Tuesday.
The final month of the holidays found a fair number of shoppers turning up at traditional stores — and increasingly on the Internet — eager to tap the deep discounts and eleventh-hour bargains being offered.
Overall, retail sales in November and December rose 3.8% from a year earlier as consumers spent $601.8 billion at stores and websites, according to the National Retail Federation.
The numbers came in a hair under the trade group’s expectations for a 3.9% boost to $602 billion in sales, but ahead of 2012’s 3.5% holiday sales growth.
“Retail sales have been volatile all year, and the holiday shopping season was no exception,” Jack Kleinhenz, chief economist of the retail federation, said in a statement Tuesday.
Economists keep a close eye on consumer spending because it makes up some 70% of U.S. economic activity.
In balmy Southern California on a recent January day, Ravi Guru was partaking in a semiregular pastime: strolling through stores in Old Pasadena.
Shopping is “almost like a hobby,” said the 36-year-old physician, who professed to owning more shoes than does his wife. The couple spent more during the holidays than in the 2012 season, buying gifts for friends, he said.
All the while, Guru abided by a key shopping rule: “I almost never buy anything at its original price,” he said, clutching a pair of half-off Zara trousers and a pair of shoes from the store that had been marked down to $49 from $200. “It has to be on sale.”
The holiday season was a spectacularly promotional one, with many retailers kicking off seasonal discounts soon after Halloween. As a result, many shoppers wrapped up much of their gift-buying before December.
So-called core retail sales — which strip out the 1.8% decline in sales of vehicles and car parts — rose 0.7% from November, the Commerce Department said. That was the largest increase in several months.
But November sales were revised down to a 0.4% increase from October after previously being calculated as a 0.7% upswing.
The holiday sales numbers signal a sense of stability in the retail industry — but possibly at the expense of retailers’ profitability, said Laura Gurski, a partner and retail expert at consulting firm A.T. Kearney.
“Consumers had a fabulous holiday season, since most merchandise was heavily promoted and discounted,” she said. “And you could shop various channels and there was an awful lot of free shipping out there.”
Some categories ended the year strong. The food and beverage sector saw sales swell 2% in December. Higher fuel prices led to a 1.6% boost in gas sales. Shivering shoppers rushed to buy winter gear, helping clothing sales swing up 1.8%.
But early discounting might have hurt December results for vendors selling sporting goods, books and music. That category’s sales slumped 0.6%. Department store revenue slipped 0.7% from November and 3.3% from December 2012.
Electronics and appliance merchants suffered a 2.5% sales decline.
“The market has been really saturated with devices and TVs,” Gurski said. “Unless there’s a very significant broad-based innovation, it’s very difficult to move the needle on this category.”
The e-commerce growth rate more than doubled that of the overall retail sector, according to the NRF trade group, which said that digital revenue soared 9.3% over the holiday to $95.7 billion.
For all of 2013, retail sales rose 4.2% from the prior year. The increase lags behind the 5.2% growth in 2012 and 7.7% growth in 2011 reported by the Commerce Department.
Economists disagreed on how to characterize the holiday season. Lindsey M. Piegza, chief economist at Sterne Agee Group Inc., said in a note that fourth-quarter sales “were uneven at best, falling short of expectations” and represented “a loss of momentum in consumer spending.” But Stuart Hoffman, chief economist of the PNC Financial Services Group, said “the holiday shopping season looks to have been good.”
Now, some experts are concerned that the massive number of workers hired for seasonal positions may soon be back to job hunting.
Retailers hired 176,500 employees last month, a 63% surge from the same month a year earlier and the largest December gain since 2005, according to consulting firm Challenger, Gray & Christmas Inc.
The late add-ons resulted in a final tally of 801,100 jobs added by retailers during the final three months of the year — a better-than-expected increase that also represents a 14-year high.
But in January, many retailers are in purging mode, trying to start fresh in the new year. Challenger voiced concerns that companies’ efforts to trim excess fat might cause temporary workers and full-time employees alike to lose their jobs.
This month, after hiring 83,000 seasonal employees, Macy’s said it would lay off some 2,500 workers while leaving some open positions vacant and closing several stores.
Payroll data in December came in far below Wall Street’s expectation for employers to add 200,000 jobs. Instead, only 74,000 jobs were added.
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