Economy Watch: Retail Sales Gain Ground in December

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The gains by retail stocks came following the retail sales data as well as a report from the National Retail Federation showing stronger than expected holiday sales growth. Consumer spending, which makes up for over two-thirds of US economic activity, increased at a 2.2 percent annualized rate for the third quarter.

On Friday, The Commerce Department announced that retail sales rose 0.4 percent last month and November's data was revised to illustrate that sales gained 0.9 percent instead of the previously reported increase of 0.8 percent.

The so-called retail sales control group grew by 0.3% on the month, which was one tenth of a percentage point less than anticipated.

Consumer confidence is on the rise, with 2017 ending on a high note. Sales in the fourth quarter as a whole increased 5.5% compared with the same period a year earlier. Nonstore retailer sales are up 12.7% year-over-year as online retailers continue to grow their market share.

"We knew going in that retailers were going to have a good holiday season but the results are even better than anything we could have hoped for, especially given the misleading headlines of the past year", the National Retail Federation's President and CEO Matthew Shay said in a press release.

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"The economy was in great shape going into the holiday season, and retailers had the right mix of inventory, pricing and staffing to help them connect with shoppers very efficiently", Kleinhenz said. Visit MarketWatch.com for more information on this news.

For example, after warning of a tough holiday Target reported that same-store sales in November and December grew 3.4%, Nordstrom said that net sales rose 2.5% and same-store sales rose 1.2% in that period, and teen apparel retailer American Eagle beat forecasts with a same-store holiday sales rise of 8%.

Retail sales - a measure of consumer spending at stores, restaurants and websites - increased a seasonally adjusted 0.4% in December from the prior month, the Commerce Department said Friday, matching expectations of economists surveyed by The Wall Street Journal. "We think the willingness to spend and growing purchasing power seen during the holidays will be key drivers of the 2018 economy", Kleinhenz said. Sales last month were supported by a 1.2 percent jump in receipts at gardening and building material stores.

There were increases in every retail category except sporting goods during the holiday season, which NRF defines as November 1 through December 31.

Clothing and accessories stores were up 2.7 percent.

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