Retail ETFs: Better, But Not There Yet | ETF Trends

As far as holiday shopping seasons go, the last one was decent for retailers. Retail sector exchange traded funds (ETFs) were bolstered by better-than-expected sales over the Yuletide and consumers who are once again willing to spend, but they’re not exactly loose with the cash.

U.S. retail sales increased 4% in the November-December period, with foot traffic rising 1.8%, reports Andrea Chang for The Los Angeles Times. Despite poor weather conditions that impeded shoppers in December, November helped pick up the slack, and industry watchers say it was the best holiday season since 2006. [There’s No Chill In Retail ETFs.]

In December, retail sales rose 0.6% – less than expected, but it was the sixth straight monthly increase, says The New York Times. [Holiday Rush Sends Retail ETFs on a Tear.]

Behind the numbers, however, are two things: one, consumers are increasing their spending and two, they’re still feeling frugal. Even chain stores noted that they’ve been having to really mark stuff down before it gets snatched off the shelf.

For more information on the retail sector, visit our retail category.

We’ve clearly got a long way to go before consumers relax enough to buy more of what they want, but unemployment will have to come down before we see real moves. Flatness in consumer discretionary ETFs like PowerShares S&P SmallCap Consumer Discretionary (NYSEArca: XLYS) and SPDR S&P Retail (NYSEArca: XRT) wouldn’t be surprising, while consumer staples ETFs like PowerShares S&P SmallCap Consumer Staples (NYSEArca: XLPS) might fare a little better in the short-term.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.