January 13, 2017 8:45 AM, EST

Retail Sales Picked Up in December on Motor Vehicle Demand


Sales at U.S. retailers accelerated in December on the heels of stronger demand for motor vehicles, capping a year of improvement for the nation’s merchants.

The 0.6% gain last month followed a revised 0.2% advance in November, Commerce Department figures showed Jan. 13. For all of 2016, sales climbed 3.3%, exceeding the 2.3% advance a year earlier.

Americans flocked to auto dealerships last month to top off a record year for the industry at the expense of some other retailers, offering a mixed picture of sales during the year-end holidays. At the same time, steady hiring, improving incomes and a surge in consumer sentiment about the economy’s prospects could help keep shoppers in stores.

“Despite being very bullish, it seems the consumer didn’t go on a shopping spree in December,” said Thomas Costerg, an economist at Standard Chartered Bank in New York. “There’s strong sentiment, but it’s not necessarily translating into bigger spending yet. I still remain optimistic consumer spending will do OK this year.”

The median forecast of economists surveyed by Bloomberg News called for a 0.7% increase in December. November sales were revised from an initially estimated 0.1% gain, while October purchases climbed 0.7%, more than the 0.6% previously reported.

Eight of 13 major retail categories showed gains in December. In addition to gains at car dealers, demand improved at internet retailers, furniture stores and building materials outlets. Sales declined at department stores, restaurants and electronics and appliances merchants.

Purchases excluding motor vehicle dealers and gasoline stations were little changed in December, weaker than the median forecast for a 0.4% gain.

Sales at auto dealers increased 2.4% last month, the most since April, while receipts at service stations rose 2% as fuel costs climbed.

The auto figures are in line with industry data. Sales of cars and light trucks jumped to a 18.3 million annualized rate in December, pushing the year’s total purchases to a record 17.55 million, according to Ward’s Automotive Group figures.

The nationwide average cost of a gallon of regular gasoline rose to $2.34 on Dec. 31 from $2.16 at the end of the prior month, according to figures from motoring group AAA.

Core sales, the figures that are used to calculate gross domestic product and which exclude such categories as autos, gasoline stations and building materials, rose 0.2% last month after little change in November.