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Holiday shopping drives US retail sales higher

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Holiday shopping drives US retail sales higher

US retail sales rose faster than forecast in December, as consumers took advantage of holiday shopping and year-end discounts.

Retail revenues increased 0.2 percent to $431.9 billion last month, official government data showed Tuesday. This represents an annualized growth rate of 4.1 percent. Economists polled by Bloomberg and Thomson Reuters forecasted a monthly gain of 0.1 percent. Retail sales excluding automobiles edged up 0.7 percent, the biggest gain since February 2013.

In total, seven of the 13 major retail sub-sectors reported gains in December, led by food and beverage stores. Revenues at these stores rose 2 percent last month, the biggest gain since October 2006. Retail activity was also paced by clothing stores and gasoline stations, where revenues rose 1.8 percent and 1.6 percent, respectively.

Electronics and appliance stores experienced the biggest drop in revenue, falling 2.5 percent. Automobile retailers dropped 1.8 percent after gaining 1.9 percent the prior month, official government data showed.

Brighter labour market prospects likely boosted consumer confidence in December, allowing retailers to overcome the coldest December in several years. The cold weather, however, probably impacted the pace of jobs growth last month, as the latest payroll figures from the Labor Department showed last week. Job growth fell to 74,000 last month, the lowest since January 2011.

“There’s still some pent-up demand,” said Russell Price of Ameriprise Financial Inc. “We see consumer sentiment and confidence continuing to rebound, and fewer headwinds now at the beginning of the year.”

Consumer confidence and labour force activity will continue to feed into one another in the coming months, as the US economy continues to rebound. Consumer confidence was back on track in December, according to Thomson Reuters and the University of Michigan’s confidence index. The January edition of the Consumer Sentiment Index will be released Friday.

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