Retail sales rose 0.6% last month, the Commerce Department's Census Bureau said on Wednesday. Data for November was unrevised to show sales rising 0.3% as previously reported. Economists polled by Reuters had forecast retail sales gaining 0.4%. Retail sales are mostly goods and are not adjusted for inflation.
Households have maintained a healthy pace of spending, thanks to a relatively strong labor market. Though spending has cooled from the third quarter's brisk rate, it has been enough to keep a much-feared recession at bay.
With the Federal Reserve expected to start cutting interest rates this year, most economists are confident that the economy will avoid a downturn. The U.S. central bank has hiked its policy rate by 525 basis points to the current 5.25%-5.50% range since March 2022.
Excluding automobiles, gasoline, building materials and food services, retail sales jumped 0.8% last month. The so-called core retail sales measure corresponds most closely with the consumer spending component of GDP. November core sales were revised higher to show them rising 0.5% instead of 0.4% as previously reported.
Before the report, economists believed that consumer spending, which accounts for more than two-thirds of U.S. economic activity, topped a 2.0% annualized rate in the fourth quarter. Growth estimates for the overall economy are currently as high as a 2.2% rate. The economy grew at a 4.9% pace in the third quarter.
The government is scheduled to publish its first estimate of GDP growth for the October-December quarter next Thursday.
Some of the anticipated slowdown in GDP growth will likely reflect smaller inventory accumulation relative to the third quarter's size.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
