US retail sales rose for a second straight month in December as consumers shrugged off uncertainty on the fiscal cliff and instead took advantage of sharp discounting during the Christmas shopping season. In December, retail sales rose by 0.5% M/M, while the consensus was looking for a more muted 0.2% M/M increase. Also the previous figure was upwardly revised from 0.3% M/M to 0.4% M/M. The details show that sales of motor vehicles and parts (1.6% M/M) continued to profit from the aftermath of the tropical storm and also sales of furniture (1.4% M/M) were continued to benefit. Sales of building materials, on the contrary, remained flat in December after increasing 0.8% M/M in the previous month. Sales of clothing (1.0% M/M), health & personal care (1.4% M/M), eating & drinking (1.2% M/M), sporting goods (0.6% M/M), non-store retailers (0.5% M/M) and food & beverages (0.4% M/M) were strong at the end of the year, partly helped by strong discounting. Gasoline station sales (-1.6% M/M) fell sharply during the month, mainly due to lower prices. As a result both retail sales excluding autos & gas (0.6% M/M) and the “control group” (0.6% M/M) surprised on the upside too in December. After a strong end of 2012, we expect retail sales to start the new year on a cautious note after the recent tax increases.