WASHINGTON, Jan 17 Reuters U.S. retail sales increased more than expected in December as consumers stepped up purchases of motor vehicles and retailers offered discounts, keeping the economy on solid ground heading into the new year.

Retail sales rose 0.6 last month, the Commerce Department39;s Census Bureau said on Wednesday. Data for November was unrevised to show sales rising 0.3 as previously reported. Economists polled by Reuters had forecast retail sales gaining 0.4. Retail sales are mostly goods and are not adjusted for inflation.

Households have maintained a healthy pace of spending, thanks to a relatively strong labor market. Though spending has cooled from the third quarter39;s brisk rate, it has been enough to keep a muchfeared recession at bay.

With the Federal Reserve expected to start cutting interest rates this year, most economists are confident that the economy will avoid a downturn. The U.S. central bank has hiked its policy rate by 525 basis points to the current 5.255.50 range since March 2022.

Excluding automobiles, gasoline, building materials and food services, retail sales jumped 0.8 last month. The socalled core retail sales measure corresponds most closely with the consumer spending component of GDP. November core sales were revised higher to show them rising 0.5 instead of 0.4 as previously reported.

Before the report, economists believed that consumer spending, which accounts for more than twothirds of U.S. economic activity, topped a 2.0…