Spending at small retailers edges up in December

NEW YORK (AP) — Sales at small retailers rose by their smallest percentage in more than two years in December, but still managed to outpace overall retail sales, according to a new report.

The improvement came even as people worried that big tax increases and spending cuts known as the fiscal cliff would go into effect in 2013.

The report, released Tuesday by MasterCard Advisors and Wells Fargo shows that sales at small retailers rose by just 3.8 percent last month, partially as a result of tough comparisons to the 9.3 percent increase posted in December 2011.

In comparison, overall retail spending edged up just 2.4 percent last month. And for the year-to-date, small business spending rose 6.8 percent, while overall retail spending rose 5 percent.

Michael McNamara, who heads MasterCard's SpendingPulse, noted that since peaking in February 2012, the growth rates for small retailers have declined every month.

"After the Great Recession, it took smaller retailers a longer time to recover than the big chains, and we finally saw some stronger growth for them in 2011," McNamara said in a statement released with the report. "Therefore, much of this present difficulty is attributable to difficult comparisons with 2011."

The figures include food-related sales, but exclude automobiles. Gasoline prices fell significantly during the month, so when gasoline sales were also excluded, small business spending rose 4.5 percent. Excluding both gasoline and food, spending rose 4.2 percent.

Also on Tuesday, the Commerce Department said that overall retail sales rose 0.5 percent in December, as shoppers focused on getting ready for holiday celebrations and put worries about potential tax increases aside. The growth was slightly better than November's 0.4 percent increase and the best showing since September. Economists were concerned that consumers wouldn't spend freely in December because Washington lawmakers hadn't come to an agreement over potentially big tax hikes and deep spending cuts. In a last-minute deal, Congress came to an agreement on taxes and delayed decisions on spending.

The MasterCard and Wells Fargo and Commerce Department reports are compiled from different sources of information.

MasterCard and Wells Fargo compile their figures from payments made through the MasterCard processing system as well as estimates of other types of payment, including cash and checks. The sales come from more than a million retail locations. The data is used to project estimates for small business spending overall, not just transactions involving MasterCard.

The Commerce Department's report, which includes sales at large chain stores, is compiled from questionnaires sent to about 5,000 companies.

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