Despite reports of sluggish holiday retail sales, the Commerce Department’s December Retail Sales report showed a significant increase. December retail sales were expected to increase by only 0.2 percent from November because most measurements of holiday shopping indicated a slow season.  The December report on Retail Sales , released by the Commerce Department’s Census Bureau, revealed an increase of 0.5 percent over November and a 4.7 percent increase from November of 2011.  More important, the November 2012 figure was adjusted upward to indicate an increase of 0.4 percent over October’s total, as opposed to the previously-reported increase of 0.3 percent.  Retail sales, ex autos increased by 0.3 percent, as expected.   Retail Sales Deliver Another Positive Number for December From the report: The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $415.7 billion, an increase of 0.5 percent (±0.5%)* from the previous month and 4.7 percent (±0.7%) above December 2011.  Total sales for the 12 months of 2012 were up 5.2 percent (±0.6%) from 2011.  Total sales for the October through December 2012 period were up 4.2 percent (±0.5%) from the same period a year ago.  The October to November 2012 percent change was revised from +0.3 percent (±0.5%)* to +0.4 percent (±0.2%). Retail trade sales were up 0.4 percent (±0.5%)* from November 2012 and 4.4 percent (±0.8%) above last year.  Nonstore retailers were up 12.6 percent (±2.3%) from December 2011 and miscellaneous store retailers were up 9.9 percent (±5.6%) from last year. The New York Federal Reserve’s Empire State Manufacturing Survey for January turned out to be a huge disappointment.  Economists had been expecting to see an increase to zero from December’s reading of negative 8.1.  Unfortunately, the January reading revealed that the general conditions index rose only to negative 7.8.  A result below zero indicates contraction.   Empire State Manufacturing Surprises to the Downside From the report: The January 2013  Empire State Manufacturing Survey   indicates that conditions for New York manufacturers continued to decline at a modest pace.  The general business conditions index was negative for a sixth consecutive month and, at -7.8, was little changed from its recent readings.  The new orders index fell four points to -7.2, and the shipments index declined a full fifteen points to -3.1.  Price increases picked up, with the prices paid index rising six points to 22.6 and the prices received index rising ten points to 10.8, the highest readings for both of these indexes in several months.  Labor market conditions remained weak, with the indexes for both the number of employees and the average workweek remaining below zero for a fourth month in a row.  The level of optimism about the six-month outlook rose somewhat from December, but remained low compared with levels in early 2012.  Significantly, the capital expenditures index fell to 4.3, its lowest reading since 2009.  Also on Tuesday, the CoreLogic Home Price Index for November revealed that house prices jumped 7.4 percent on a year-over-year basis, making their biggest gain since 2006.  The CoreLogic HPI is used by the Federal Reserve and  – unlike the Case-Shiller Home Price Index – it is a three-month weighted average, which is not seasonally adjusted. The major ETFs expected to respond to the report on December Retail Sales, the Empire State Manufacturing Survey for January and the CoreLogic Home Price Index for November are: SPDR S&P Retail ETF (NYSEARCA:XRT)  +2.09% Market Vectors Retail ETF (NYSEARCA:RTH)  +1.21% Consumer Descretionary Select Sector SPDR Fund ETF (NYSEARCA:XLY)  +0.73% Industiral Select Sector SPDR Fund ETF (NYSEARCA:XLI)  +0.28% iShares Dow Jones US Real Estate ETF (NYSEARCA:IYR)  +0.47%  Learn More About iShares ETFs Bottom line:  The Census Bureau’s Retail Sales report for December was much better than expected, demonstrating that the crucial element of consumer demand, which has been so low since the onset of the economic crisis, is returning faster than previously expected. Sign up for Wall Street Sector Selector’s FREE Stock Market Timing Indicator!    Disclaimer: The content included herein is for educational and informational purposes only, and readers agree to Wall Street Sector Selector’s Disclaimer , Terms of Service , and Privacy Policy before accessing or using this or any other publication by Wall Street Sector Selector or Ridgeline Media Group, LLC.