US holiday sales to grow at faster pace this year, says retail industry group

Shoppers in San Francisco on Aug 29, 2016.
Shoppers in San Francisco on Aug 29, 2016.PHOTO: AFP

NEW YORK (BLOOMBERG) - US retail sales this holiday season may grow at a faster pace than last year, fuelled by rising wages and a stronger job market, the National Retail Federation said.

Consumer purchases may increase 3.6 per cent to a US$655.8 billion (S$898.8 billion) in November and December, excluding autos, gas and restaurant sales, the NRF said in a statement on Tuesday (Oct 4).

Sales climbed 3.2 per cent last year, and the seven-year average since the recession ended in 2009 is 3.4 per cent, the group said.

US shoppers may be feeling more holiday spirit, with the unemployment rate holding at an eight-year low and bigger paycheques putting more money in shoppers' wallets.

There are signs that consumers already are loosening their purse strings: The US personal savings rate fell to 5.7 per cent of disposable personal income in August, down from 6.2 per cent in March, according to the Commerce Department. Still, weak mall traffic may force traditional retailers to work hard over the holidays to entice customers.

"All of the fundamentals are in a good place, giving strength to consumers and leading us to believe that this will be a very positive holiday season," NRF chief executive officer Matthew Shay said in the statement.

Non-store sales may increase 7 per cent to 10 per cent this year, reaching as much as US$117 billion, according to the NRF. Online sales account for about 90 per cent of this measure, the group said.

The NRF's total holiday sales estimate was lower than a projection from Deloitte, which said last month that sales in stores may increase as much as 4 per cent. A separate survey of about 1,000 US consumers by AlixPartners indicated that 83 per cent of shoppers expect to spend about the same or more this holiday season.

In preparation for the holiday rush, retailers are making their annual push for seasonal workers. Target and Kohl's have said they plan to hire the same number of temporary employees as last year, with both adding about 70,000 apiece. Macy's, meanwhile, is hiring 83,000 holiday workers, down about 2,000 from last year.

Political uncertainty abroad and at home, as well as the chance of unseasonably warm weather, are the biggest threats that could restrain holiday spending, NRF chief economist Jack Kleinhenz said in the statement. Still, the strong US economy is likely to fuel shoppers this season.

"Consumers have seen steady job and income gains throughout the year, resulting in continued confidence and the greater use of credit, which bodes well for more spending throughout the holiday season," Mr Kleinhenz said.