After a glum holiday season last year, retailers hope the coming months give reason to be jolly, forecasting Tuesday a 4.1 percent increase in sales for November and December.
Issuing its annual Holiday Sales Forecast, the National Retail Federation said it expects sales of $616.9 billion, or a 4.1 percent increase over November and December 2013.
That’s well above the 2.9 percent holiday sales growth averaged over the past 10 years, and sales are expected to be up this year in part because 2013’s holiday season was hampered by poor weather, and a government shutdown that weighed on consumers.
“Generally the overall conditions are improving,” said Matthew Shay, president and CEO of the retailers’ group, adding that given last year’s uncertainty “there is some potential pent-up demand.”
The U.S. economy grew at a blistering 4.6 percent annual rate from April through June, and the September unemployment rate fell below 6 percent_ to 5.9 percent_ for the first time since June 2008. But consumer-confidence indicators have been up and down for much of the year, and while consumption is up for the year it’s hardly been on a tear, rather a slow and steady improvement.
“The overall belief is (that) the consumer will continue to be resilient as they have been,” Jack Kleinhenz, the group’s chief economist, told reporters in a conference call. “The consumer has been a key driver in this recovery.”
Given the uneven nation of the economic recovery, he and Shay cautioned, consumers are likely to price sensitive and demand discounts.
Online sales are also expected to grow this holiday season. Retailers project online sales in November and December to grow between 8 percent and 11 percent to $105 billion or greater. These sales grew at an 8.6 percent rate during the same two months of 2013.
Hiring is expected to grow modestly in the coming holiday season, with retailers expected to hire between 725,000 and 800,000 workers over the period. That’s potentially an improvement over last year’s 768,000, which itself was a 14 percent improvement over 2012.
The federation’s forecast is based on several economic indicators, including data on consumer credit, disposable personal income and sales figures from prior months. Retail sales estimates exclude spending on autos, gasoline and restaurants.