By Josh Mitchell and Ben Leubsdorf

WASHINGTON--Americans boosted spending on cars and gasoline in December, causing overall retail sales to climb quickly despite consumer cutbacks in other areas.

Retail and restaurant sales rose a seasonally adjusted 0.6% in December from a month earlier, driven by a surge in auto sales, the Commerce Department said Friday. Sales at retailers outside of autos grew 0.2% last month. And sales at retailers excluding car dealerships and gasoline stations were flat, the weakest reading since July.

Economists surveyed by The Wall Street Journal had projected a 0.7% increase in overall sales and a 0.5% gain in sales excluding autos.

Consumerspending accounts for about two-thirds of economic output in the U.S., and a pickup in retail sales can fuel growth by boosting profits at big and small businesses, in turn creating demand at factories and putting pressure on companies to hire.

Friday's report offered a mixed outlook for retailers and the economy. Retail sales grew healthily in the final four months of 2016, prolonging a broader trend of steady though unspectacular growth and helping the economy expand. Sales grew 3.3% last year overall, faster than the prior year's 2.3% gain but slower than 2014's 4.2% increase.

The figures don't account for inflation, however. A big decline in gasoline prices starting in 2014 weighed on overall retail sales over the past two years. A rebound in gas prices in recent months has in turn boosted headline spending figures.

The benefits of higher spending weren't evenly spread throughout the retail sector. Car sales fueled last month's retail-sales increase, with purchases at car and parts dealers rising 2.4% in December from a month earlier and 3.8% in all of 2016 compared to 2015.

Consumers also shelled out more last month for furniture, building and garden materials, and sporting goods. Spending at nonstore retailers--a category dominated by online retailers like Amazon--rose 1.3% in December from a month earlier and 11.4% in 2016.

Sales at gas stations grew 2% in December from the prior month, though for the full year that category fell 6.3% from 2015.

Sales at other retailers weakened in December, particularly department stores, prolonging a years-long shift to online retailers and away from brick-and-mortar outlets. Some big retailers have announced layoffs and store closings in recent months as a result of the shift. Spending also fell last month at restaurants, and sales at grocery stores were flat from November.

Many factors are boosting consumers right now.The stock market is near all-time highs, with the Dow Jones Industrial Average near 20000. Workers' wages are rising more quickly than previously in the recovery. Gasoline prices remain modest, giving consumers more discretionary money. And job growth remains steady.

The Commerce Department's full retail-sales report can be accessed at: http://www.census.gov/retail/marts/www/marts_current.pdf.

Write to Josh Mitchell at joshua.mitchell@wsj.com and Ben Leubsdorf at ben.leubsdorf@wsj.com.

(END) Dow Jones Newswires

January 13, 2017 08:45 ET (13:45 GMT)

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