By Harriet Torry
WASHINGTON -- Consumers headed into 2020 on a solid footing, driving up retail sales in the final month of the holiday season.
December retail sales, a measure of purchases at stores, restaurants and online, increased a seasonally adjusted 0.3% from a month earlier, the Commerce Department said Thursday.
Solid gains in nearly every category offset a drop in motor-vehicle sales, the data showed. The final month of the holiday season is key for retail businesses, especially for department stores, clothing outlets and online sellers.
Consumer spending has been supported by a strong jobs market and wage gains, as well as diminished tariff uncertainty over the U.S.-China trade dispute.
Excluding the volatile categories of autos and gas, retail sales rose 0.5% in December, the strongest pace of growth in five months.
Still, updated numbers from Commerce showed retail sales outside of motor vehicles and gasoline declined in the prior three months. After a recent high in that category in July, "we've been on a smooth descent ever since," said Joseph Brusuelas, chief economist at RSM US LLP.
"The consumer's in solid shape," Mr. Brusuelas said, adding however that "a good description of this report would be fading momentum."
The National Retail Federation said on Thursday that retail sales for the November-December period, excluding automobiles, gas and restaurants, increased 4.1% to $730.2 billion, compared with the same period last year. That is at the higher end of the trade group's expectation of 3.8% to 4.2% growth.
"This was a healthy holiday season," said Jack Kleinhenz, the group's chief economist. "Despite a late Thanksgiving and worries about tariffs, the consumer didn't go away."
Nevertheless, some large retailers recently reported disappointing holiday sales, including Target Corp., Macy's Inc., Kohl's Corp. and J.C. Penney Co.
Macy's, Kohl's and Penney are heavily dependent on apparel, a category that has continued to struggle as consumers shift their spending to other areas such as health and wellness.
After the report, data firm IHS Markit lowered its tracking estimate of fourth-quarter gross-domestic-product growth by 0.3 percentage point to 2.3%, citing softness in core retail sales. It lowered it further to 2.2% after weak data on retail inventories later in the day.
Thursday's Commerce Department report showed spending was strong in a number of key categories in the final month of the holiday season. Due to a late Thanksgiving, there were six fewer days in the 2019 holiday-shopping season compared with 2018. Cyber Monday fell in December in 2019.
Sales at electronics and appliance stores increased 0.6% from a month earlier. Clothing-store sales rose 1.6% from the prior month, and sporting-goods sales increased 0.9% in December. Retail sales aren't adjusted for inflation.
December department-store sales slipped 0.8% from November and declined 5.5% from a year earlier. Meanwhile, sales at nonstore retailers, a category that includes internet merchants such as Amazon.com Inc., were up 0.2% from November and rose 19.2% compared with a year earlier.
Justin Beebe, of Wilmington, Del., recently bought a folding bike to commute to his advertising job, to cut down on driving and save money on gas.
While the bike was a large one-off purchase at around $2,000, "over time it felt like it was worth it, saving rather than an expense," the 29-year-old said.
Consumer spending was the main driver of economic growth in mid-2019, as businesses pulled back on investment. Headed into 2020, the fundamentals underpinning consumer spending -- low unemployment and rising incomes -- remain solid.
"The U.S. consumer is quite healthy," Delta Air Lines Inc. Chief Executive Ed Bastian said Tuesday. The airline said lower fuel prices and buoyant demand from holiday travelers helped drive up quarterly earnings.
Still, Target said Wednesday that November-December holiday sales were sluggish, increasing just 1.4% for stores and digital channels operating for at least 12 months. The Minneapolis-based chain cited weak sales of toys and electronics, two categories that are typically big sellers during the gift-giving season.
The Commerce Department report showed car and truck sales fell 1.3% in December. Gas-station sales advanced 2.8%. Restaurant sales increased 0.2% from the prior month. Those categories are less closely tied with holiday gift-giving.
--Suzanne Kapner contributed to this article.
Write to Harriet Torry at firstname.lastname@example.org