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By Richa Naidu
CHICAGO (Reuters) - U.S. holiday spending jumped 5.5 percent - its biggest gain since 2005 - spurred by stronger employment, rising consumer confidence and expectations of higher wages and bonuses after the recent tax bill, the National Retail Federation said on Friday.
Sales in November and December rose to $691.9 billion, compared with $655.8 billion the previous year, excluding sales at restaurants, automobile dealers and gasoline stations. The NRF previously forecast sales would rise 3.6 to 4 percent for the period. Holiday sales can account for up to 40 percent of annual sales for some stores.
While strong sales were widely expected, many retailers were particularly hungry to prove themselves this past holiday season, following a year marred by tumbling stock prices, management shakeups, a slew of store closures and several industry bankruptcies.
NRF Chief Economist Jack Kleinhenz said a number of factors contributed to surging consumer confidence including a pickup in income, a rising stock market, unemployment levels at 17-year lows and the timing of the tax cuts.
"When that got passed and companies started to announce bonuses and wage increases, the consumer felt very much more at ease going into the holiday season and spending," Kleinhenz said in an interview, adding the possible tax cuts had not been accounted for in the NRF's forecast.
Several large U.S. employers, including Walmart, American Airlines Group Inc
Kleinhenz also said retailers had the right mix of inventory, pricing and staffing to help connect with shoppers.
Struggling with competition from Amazon and off-price stores, traditional retailers have worked hard to address changing consumer habits by lowering prices, sprucing up physical stores and websites and improving delivery options.
(Reporting by Richa Naidu; Editing by Anna Driver and Matthew Lewis)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)