A holiday sales headache: interpreting the results

Was it a good holiday season or a bad one? Depends who you ask and how results are interpreted as evidenced by conflicting perspectives on U.S. Commerce Department statistics released Thursday morning.

It was widely reported that December sales were a disappointment by media outlets, which cited Commerce Department statistics released Thursday morning showing a rise of 0.1% versus the 0.3% that was widely reported as the expectation of economists.

Reuters reported that retail sales rose at the weakest pace in seven months during December, which coupled with an uptick for jobless benefits led the news service to infer that the economic recovery remains shaky.

Few in the retail industry would argue with that assertion, or the view that the holiday season was front-loaded. That fact was reflected in an upwardly revised November sales figure from the Commerce Department, which showed November sales increased 0.4% rather than the previously released 0.2%. However, if automobile sales are stripped out, core retail sales in December were said to have declined 0.1% following a 0.3% increase in November.

The Associated Press also commented on December’s negligible increase in sales, but its spin on the numbers was that the paltry gain was enough to produce the largest annual increase in retail sales in more than a decade. For all of 2011, retail sales totaled a record $4.7 trillion, a gain of nearly 8% and the largest percentage increase since 1999, according to AP.

The National Retail Federation, which looks at the Commerce Department data more narrowly to exclude auto, gas and restaurant sales, said holiday season sales increased 4.1% to $471.5 billion and exceeded the trade group’s original forecast of 3.8% growth. NRF also distinguishes between seasonally adjusted numbers, which discount the impact of inflation and unadjusted numbers which can make the situation look different. For example, the Commerce Department’s 0.1% gain in December is a seasonally adjusted figure, but on an unadjusted basis the increase was 6.2%.

“The right mix of strong promotions, lean inventories and an emphasis on value put retailers in the perfect position to end the year on a high note,” said NRF president and CEO Matt Shay. “A better-than-expected holiday season is welcome news for an economic recovery that continues to be sluggish, and demonstrates retail’s powerful role as an engine of growth.”