U.S. retailers finally had a merry Christmas.
The National Retail Federation said on Wednesday that retail sales for November and December rose 4%, roughly in line with its initial forecast and the industry’s best showing in three years. The number is likely to come as a relief to retailers after a slow start to the season despite efforts to spur early spending with aggressive deals at the start of November.
The industry group characterized the growth as a turning point for retail after years of reticence on the part of shoppers to spend--and hold out for deals--as they grappled with slow job growth and the absence of meaningful wage gains.
“There is every reason to believe that we have moved well beyond the days of consumer pessimism and that the trajectory for retailers continues to point up," said NRF President and CEO Matthew Shay. The NRF had forecast holiday sales, which excludes gas, would rise 4.1%.
With the U.S. economy creating 3 million jobs in 2014 and gas prices at multi-year lows giving consumers billions more to spend, holiday revelers picked up their spending in December and salvaged a season that initially looked worrisome after spending during the Thanksgiving/Black Weekend Friday plummeted 11%. Earlier deals simply brought spending sooner in November.
But the U.S. job creation machine kicked into high gear, especially later in the year--December was the 11th consecutive month of job gains above 200,000--the longest such stretch in 20 years, bringing the unemployment rate to 5.6%. And while wages didn’t rise much, people worked more hours, giving them more money to spend.
“This is the best the U.S. economy has looked since before the recession,” former Federal Reserve Chairman Ben Bernanke said earlier this week at NRF’s annual retail industry convention as he predicted more strength in 2015 and beyond.
A number of big retailers have reported their holiday numbers already, reflecting this renewed mood to spend. J.C. Penney JCP said last week comparable sales rose 3.7%, easily beating Wall Street forecasts, while at Macy’s M , there were up 2.1%. Department stores had been struggling in the fall as consumers cut back on spending on apparel to shift more of it to home repairs.
According to the NRF, stores selling furniture and electronics saw some of the biggest gains, while general merchandise retailers saw the lowest.
Yet there were some areas of retail that were surprisingly weak. MasterCard Advisors said luxury sales had declined in each of the last three months of the year, and Gap Inc GPS at its namesake and Banana Republic chains.
