U.S. Retail Sales End 2024 on a High Note, Labour Market Still Robust

U.S. retail sales demonstrated continued strength in December, driven by robust consumer demand for motor vehicles and a broad range of other goods. This positive data, coupled with a strong labor market, reinforces the Federal Reserve’s cautious approach to interest rate cuts.

The Commerce Department reported a 0.4% increase in retail sales last month, exceeding economist expectations. This follows a robust November, further solidifying the economy’s momentum. The labor market remains resilient, with a surge in nonfarm payrolls in December and the unemployment rate falling to 4.1%.

While underlying inflation moderated, overall consumer prices increased at the fastest pace in nine months, driven by strong wage growth. This robust consumer spending, fueled by a healthy labor market, suggests the economy does not require immediate monetary stimulus.