US retail sales rise by most in three months to cap holidays

US retail sales rose at the strongest pace in three months in December, capping a solid holiday season that suggests consumer resilience heading into the new year.

The value of retail purchases, unadjusted for inflation, increased 0.6% in a broad-based advance, Commerce Department data showed Wednesday. Excluding autos, sales rose 0.4%.

Nine of 13 categories posted increases, with the biggest gains in clothing, general merchandise stores — which include department stores — and e-commerce. Motor-vehicle sales were up 1.1%, matching the biggest increase since May, while those at gas stations fell for a third month as pump prices declined.

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Treasuries and US stock futures fell as traders pared bets on Federal Reserve interest-rate cuts this year.

The figures cap a year in which household spending largely surprised to the upside, confounding economists’ calls for a recession. However, forecasters see that momentum fading in 2024 as consumers contend with lingering inflation, elevated borrowing costs and waning savings.

“We still think a further slowdown lies ahead, as slowing employment and wage growth feed through and the lagged impact of higher interest rates takes some additional toll, but there is still little to suggest a sharper downturn lies in store,” Andrew Hunter, deputy chief US economist at Capital Economics, said in a note to clients after the release.

So-called control group sales — which are used to calculate gross domestic product — advanced 0.8%, the most since July. The measure excludes food services, auto dealers, building materials stores and gasoline stations.

The retail figures largely reflect purchases of merchandise, which comprise a relatively narrow share of overall consumer spending. December figures on total personal consumption expenditures are due later this month.

A report last week showed goods prices excluding food and energy snapped a months-long decline in December, as prices of used cars and apparel picked up despite year-end promotional activity.