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United States Retail December 2023

United States: Retail sales growth gains momentum in December

Retail sales expanded 0.6% in month-on-month seasonally adjusted terms in December, which was above November’s 0.3% increase and well above market expectations of 0.4%. Looking at the details of the release, December’s pickup was broad-based, with the motor vehicle and parts dealers, food and beverages, non-store retailers sales and general merchandise stores sub-sectors all accelerating.

On an annual basis, retail sales grew 5.6% in December, notably above November’s 4.0% expansion and marked the best result since January. Meanwhile, annual average growth of retail sales was unchanged, coming in at November’s 3.4% in December.

Taken together, December’s strong retail sales data, coupled with month-on-month growth in overall private spending on both goods and services in October–November, points to a solid consumer spending outturn for Q4 as a whole: Households were buoyed in the quarter by lower inflation and a strong jobs market. That said, spending is set to slow turning to 2024 as higher interest rates bite and the labor market loses steam.

On the reading, TD Economics’ Shernette McLeod said:

“Once again U.S. consumers showed their resilience, boosting retail spending in December and closing out the year with a bang. Sales for the month rose at a relatively fast pace adding to decent gains in November. This was sufficient to overcome October’s decline, causing retail sales to grow at a 3.9% annualized pace for the fourth quarter. While decent, this was still a step-down from 6.9% q/q annualized growth in Q3. With the holidays in the rear view mirror and consumer headwinds still firmly in play, spending is expected to continue slowing in the New Year.”

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