NEW YORK: US holiday sales in 2018 will increase 4.3 per cent to 4.8 per cent boosted by a strong economy but will be slower than a year ago when consumer spending surged to a 12-year high, according to a forecast from a leading retail industry group.
The National Retail Federation (NRF) said holiday sales growth will be higher than an average increase of 3.9 per cent over the past five years but slower than the 5.3 per cent growth witnessed a year earlier when consumer spending grew the most since 2005 and was boosted by tax cuts.
“Last year’s strong results were thanks to growing wages, stronger employment and higher confidence, complemented by anticipation of tax cuts that led consumers to spend more than expected,” NRF Chief Economist Jack Kleinhenz said.
“With this year’s forecast, we continue to see strong momentum from consumers as they do the heavy lifting in supporting our economy,” he said. The combination of more jobs, improved wages, tamed inflation and an increase in net worth all provide the impetus to spend, he added.
The trade body also said there are continued concerns about an escalating trade war with China but it is optimistic about consumers’ propensity to spend.
The retail trade group said it expects sales for the last two months of the year between $717.45 billion and $720.89 billion, excluding autos, gasoline and dining out. Holiday sales in 2017 were $687.87 billion.
NRF’s forecast is one of the most closely watched benchmarks ahead of the holiday season, when retailers like Amazon.com Inc, Walmart Stores Inc and Target Corp generate an outsized portion of their profits and sales.
The last two months of the year can account for 20 per cent to 40 per cent of annual sales for many retailers.
The NRF forecast follows other estimates from companies like AlixPartners, which says sales will grow in between 3.1 per cent and 4.1 per cent as “2017 will be a tough year to follow.” Forecasts from companies like Deloitte and PwC expect holiday retail sales to grow around 5 per cent.
— Reuters
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