Retail sales rose 0.4 percent in December, the Commerce Department said Friday, after a 0.9 percent surge in November.
Economists had expected retail sales to rise by 0.4% compared to the 0.8% increase originally reported for the previous month.
The retail sales numbers reflect spending at both online and bricks-and-mortar stores and restaurants, but doesn't include sales of automobiles. Sales at nonstore retailers, mostly online-shopping outlets, rose 12.7% on the year. "We've seen the labor market has been rather solid", said Satyam Panday, senior economist at S&P Global.
Closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, increased by 0.3% in December after spiking by an upwardly revised 1.4% in November. Building materials and supplies stores posted the biggest sales increase at 8.1 percent, followed by home furnishings at 7.5 percent and electronics and appliance stores at 6.7 percent.
There were increases in every retail category except sporting goods during the holiday season, which NRF defines as November 1 through December 31. Americans are more confident about the economy and are more willing to spend.
Jeremy Andrus, chief executive officer at Traeger Grills, a Salt Lake City, Utah-based maker of wood pellet grills, said Traeger's fastest-selling grill shifted from an $800 model to a $1,000 model this holiday season as consumers showed a willingness to reach deeper into their pockets.
Economists said a number of factors, including a growing economy and booming stock market, helped spur spending growth.
As a result, certain retail segments were particularly strong in December. Spending could get a boost from last month' $1.5 trillion package of tax cuts that was passed by the Republican-controlled U.S. Congress and then signed into law by President Trump.
Overall though, the IHS said the holiday sales lifts its outlook for the fourth quarter. The NRF had forecast a strong season but it only anticipated sales growth of 3.6 and 4 percent. Among the top 30 cities, Philadelphia ranked No. 12 in terms of total dollars spent in November and December. Ellison predicted a rebound in apparel and other categories.