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Jan 13, 10:49 AM EST

More pay, greater confidence lifts US retail sales 0.6 pct.


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AP Photo/Mark Lennihan

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WASHINGTON (AP) -- Americans stepped up their auto buying and online shopping in December, reflecting a boost in confidence after the election and a solid increase in pay.

Retail sales rose a seasonally adjusted 0.6 percent, following a small 0.2 percent gain in November, the Commerce Department said Friday .

Most of the strength was in auto sales, which jumped 2.4 percent in December, the biggest gain since April. Gas station sales rose 2 percent, largely because of higher prices. Excluding autos and gas, retail sales overall were flat.

Some economists were disappointed by that figure and said it suggested that many consumers remain cautious.

"Retail sales appear healthy enough, but looking past the headline there are a few concerns about the strength of consumer spending," said Paul Ashworth, an economist at Capital Economics. Yet "with consumer confidence surging to multi-year highs after the election and wage growth still solid, there is no reason to suspect that consumption growth is going to weaken in the first half of this year."

And there were other areas of strength outside autos. Online retailers in particular reported better sales. Home and garden centers, furniture stores and sporting goods retailers also saw sales grow.

The healthy spending was likely fueled by soaring consumer confidence, which has jumped after the election to the highest level in nearly a decade. Small businesses are also more bullish. And Americans' paychecks are getting fatter: Average hourly pay rose 2.9 percent in December from a year earlier, the most in seven years.

Earlier this month, automakers reported that sales reached a record high of 17.6 million in 2016. With interest rates rising, however, many industry experts forecast that sales will plateau and possibly slip this year.

The data reflected the ongoing struggles of traditional brick-and-mortar retail chains as Internet merchants gobble up more market share. Department store sales fell 0.6 percent and electronics and appliance stores reported a 0.5 percent drop.

Yet sales jumped 1.3 percent in a category that mostly consists of online retailers but also includes catalog companies. For all of 2016, online sales jumped 13.2 percent, three times the gain of all retail sales.

Those trends were sharply in focus in the past two weeks as clothing retailer The Limited announced that it would close all 250 of its stores, costing 4,000 jobs. That followed department store chain Macy's decision to close 68 stores and cut 10,000 jobs. Sears also said last week that it would close another 150 stores.

Amazon, meanwhile, said Thursday that it would add 100,000 jobs over the next 18 months as it expands its warehouse and logistics capabilities.

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Contact Chris Rugaber on Twitter at http://Twitter.com/ChrisRugaber

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