Retail Sales Rise 0.2 Percent in December, 4.2 Percent in 2013

Andrew Klips |

After a dismal non-farms payroll report last Friday, the markets were looking for an optimistic report to show that the economy was grinding slower to end 2013. A report Tuesday morning provided a little sunshine, showing that retail sales modestly rose more than expected in December as consumers took advantage of discounted prices through the holiday season.

The Commerce Department reported that headline retail sales climbed 0.2 percent to $431.9 billion in December from November. Compared to December 2012, overall retail sales were ahead by 4.1 percent. Economists expected sales to be flat from November to December.

Meanwhile, the agency downwardly revised November’s figure from a 0.7-percent rise compared to October to a 0.4-percent increase.

For all of 2013, retail sales were up 4.2 percent compared to 2012. In 2012, sales were up 5.4 percent compared to 2011, which posted growth of 7.7 percent from 2010.

While Americans were snapping-up lower priced goods, big ticket items were a drag on total sales. Sales at auto dealers were down 1.9 percent in December, normally one of the best months of the year for car sales. Some experts blame extremely harsh weather (it was the coldest December in four years) as a reason for slower auto sales. As we reported earlier, automakers still had their best year since 2007.

Purchases at electronics and appliance stores also slid from November to December by 2.5 percent.

Excluding motor vehicles and parts, retail sales improved by 0.7 percent month-over-month, marking the biggest one-month gain since February.

Going along with the idea that bad weather kept people from making large, discretionary purchases, retail sales got a lift from purchases of food and beverages (+2.0%), clothing (+1.8%) and gasoline (+1.6%), necessities that are typically purchased during periods of inclement weather. People also spent 0.6 percent more at health and personal care stores.

Sales at “nonstore retailers,” which include online purchases rose 1.4 percent from November to December and a stellar 9.9 percent from December 2012.

Sales at brick-and-mortar department stores are being closely monitored after Macy’s (M) recently announced that it is closing five stores and laying-off 2,500 employees in a bid to conserve cash.  According to the government data, sales at department stores fell 0.7 percent month-over-month in December and 3.3 percent versus December 2012.

Wall Street is looking favorably upon the news today to recover from a triple-digit loss on Monday for the Dow Jones Industrial Average. Of course, big merger and acquisition news never hurts either, with Charter Communications (CHTR) offering $61 billion for Time Warner Cable (TWC) and Google (GOOG) paying $3.2 billion to snag home automation company Nest Labs. Just after lunch, the Dow is up 80 points; the S&P 500 has advanced 15 points and the Nasdaq has gained 59 points.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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