(Reuters) -U.S. consumers defied inflation to ring in a solid 2023 holiday shopping season, fueled by a strong appetite for beauty products, apparel and electronics that drove a 3.8% rise in sales, data from the National Retail Federation (NRF) showed on Wednesday.
Holiday sales across both brick-and-mortar and online channels rose to $964.4 billion in the November through December period, coming largely above the NRF's prior expectation of a rise between 3% and 4%, in the range of $957.3 billion to $966.6 billion.
Data from the Commerce Department earlier on Wednesday showed December retail sales rose by 0.6%, better than the 0.4% increase expected by economists polled by Reuters - a sign that the U.S. economy was on strong ground at the start of 2024.
The much-awaited report from the NRF, a retail trade group, shows that Americans dug into their pockets despite tighter shopping budgets, taking advantage of steep discounts for their Christmas purchases.
"In some ways... the economy's probably getting back into some kind of normalcy," NRF Chief Economist Jack Kleinhenz told Reuters in an interview.
Apparel firms including Lululemon (NASDAQ:LULU), Abercrombie & Fitch and footwear maker Crocs (NASDAQ:CROX) lifted their holiday-quarter sales targets last week, boosted by fresher styles and leaner inventories.
While a strong labor market and elevated wages have helped keep consumer health intact, Kleinhenz warned that the strength might not be sustainable, "largely because I think job growth is going to start to decelerate".
"I'm not sure that the unemployment will rise, but... I sense that we're adjusting to a different pace for 2024 than what we saw in 2023."
While holiday hiring for some retailers was lower than prior years, the NRF estimated that holiday jobs totaled 439,500 for November and December, compared to its initial expectation that retailers would hire between 345,000 and 450,000 seasonal workers.