Holiday Sales Surprise

Retail sales fell in the United States in the all-important month of December, the government said Tuesday, but the drop was much smaller than analysts had predicted, providing another sign of a possible recovery in the world's largest economy.

Sales for December dropped 0.1 percent to a seasonally adjusted $295.1 billion, the Commerce Department reported, after falling a revised 3.0 percent in November. A late-season pickup in holiday sales had been expected to help boost the overall figure for December, even as many retailers had to discount heavily to get shoppers into stores.

A 4.2-percent drop in sales at gasoline stations led the decline in overall sales. However, furniture, electronics and clothing posted strong gains.

Retail sales are watched closely because consumer spending fuels two-thirds of the U.S. economy, which has been in a recession since last March, according to the National Bureau of Economic Research.