WASHINGTON — Sales at apparel specialty stores and department stores rose in December despite the nation’s fiscal uncertainty at the end of the year, while sales at discounters remained soft, according to the U.S. Commerce Department’s monthly retail sales report released on Wednesday.
Apparel and accessories stores posted a 1 percent seasonally adjusted increase in sales to $20.3 billion in December compared with November, while sales at department stores rose 0.3 percent to $15 billion last month. Sales at general merchandise stores, a category that includes department stores and discounters, were flat at $51.9 billion.
On a year-over-year basis, apparel specialty store sales rose 5.1 percent, while department store sales fell 1.7 percent and general merchandise store sales fell 2 percent.
Economists and retail analysts said retailers held their own in December as consumers increased their spending during the holidays despite the tense talks in Washington to avert the fiscal cliff.
The Obama administration and Congress eventually reached a deal on Jan. 1 that prevented personal income taxes from rising on the middle class.
However, many economists and experts believe retail sales will be soft in the first quarter of 2013 because lawmakers and the White House let a two-year Social Security payroll tax cut expire, leaving consumers with less take-home pay this year.
Kevin Regan, senior managing director at FTI Consulting, said apparel sales in December were stronger than expected but noted that holiday sales performance was uneven.
“There are pockets of growth and there are some troubled retailers out there,” Regan said. “When you look at department stores, [sales] were down 1.7 percent this year versus last year and we have been watching that pattern now for several months.”
Regan said several national chain retailers had a “tough November” because of Hurricane Sandy, which forced store closures at the end of October.
Despite that, the apparel specialty store sector continued to post sales gains. “Apparel had a very good month when you are talking about specialty stores,” he said.”Overall, it seems their numbers were good and people were obviously shopping.”
But Regan said he expects the Social Security payroll tax hike to affect consumers and retail sales.
“I think retailers have taken a cautious view of the first half. They are going to have to figure out how to get consumers to spend when consumers have been reminded that they have less money to use to consume,” Regan said.
In the overall economy, retail sales rose 0.5 percent to $415.7 billion in December.
“Retail sales made a comeback in December and November after a dismal showing in October,” said Chris G. Christopher, senior principal economist at IHS Global Insight. “Holiday shoppers kept spending in December, despite a dramatic drop in consumer confidence about the fiscal cliff.”
Still, he noted that, while holiday retail sales rose 2.7 percent above last year, it was “a poorer than expected showing and considerably lower than the previous two years.”
“Our forecast for consumer spending adjusted for inflation growth is 2.1 percent for the fourth quarter [in 2012],” Christopher said. “However, the first quarter of the new year is likely to end up at a 1.4 percent growth since disposable income is going to take a hit due to the expiry of the payroll tax cut. In addition, if the political bickering over the debt ceiling issue reaches a fever pitch as it did in the summer of 2011, then consumer confidence will nose-dive further into recession territory.”