NEW YORK — The holiday shopping season was the best since 2006, as a strong November more than offset spending that tapered off in late December.

The strength of holiday sales from Oct. 31 through Jan. 1 suggests a recovery in consumer spending. For investors, whose expectations were riding high after a stronger-than-expected November, the December figures were disappointing. That hurt retail stocks Thursday.

Early holiday discounts, which started in late October, drove big sales early in the season but also had shoppers finishing more gift-buying before December. A lull early in December and a blizzard Dec. 26 in the Northeast also took bites out of sales.

From Oct. 31-Jan. 1, revenue at stores open at least a year rose 3.8 percent over last year, according to an index compiled by the International Council of Shopping Centers. That's the biggest increase since 2006, when the measurement rose 4.4 percent.

The index tailed off to a 3.1 percent increase in December after a 5.4 percent rise in November.

"The overall season was good, but the strength came from the beginning of the season," said Michael P. Niemira, chief economist at International Council of Shopping Centers.

December's gains came on top of a solid 3.6 percent gain in December 2009; November's figures compare with a 0.2 percent decline.

Thursday's figures are based on revenue at stores open at least a year. That's long been considered a key indicator of a retailer's health, because it excludes revenue at stores that open or close during the year.

However, changes in shopping habits and other factors have led the figure to lose some of its luster as a yardstick. Some stores exclude online revenue, which soared 12 percent overall and accounts for 8 to 10 percent of total holiday spending. Online spending spiked 17 percent the week after Christmas, according to comScore, possibly getting a boost from shoppers cooped up by snow.

In addition, many retailers have stopped reporting monthly figures, including some of the biggest chains: Wal-Mart Stores, Best Buy Co. and Sears Holdings Corp. Only about 30 merchants report now, down from about 60 at the end of 2005.

Nevertheless, the figures offer what analysts believe was a fair picture of the holiday season, according to Ken Perkins, president of RetailMetrics LLC.

Analysts say that the holiday 2010 season also marked the time that spending in many categories returned to pre-recession levels. Online spending, as well as spending on groceries, auto parts and clothing, are now above the pre-recession peak, according to MasterCard Advisors' SpendingPulse, which tracks all transactions including cash.

Jewelry, home furnishings and luxury goods are still below peaks, according to the data service.

Niemira says he's confident spending growth should continue in 2011.

"What really has to kick in is the employment story to keep the momentum going," Niemira said. A government jobs report due Friday is expected to show the unemployment rate dipped to 9.7 percent in December from 9.8 percent in November.

For Jerrie McKennon, a retiree in Burleson, Texas, 2010 was a good year. "I loosened up in 2010. The money we lost came back," he said while at Manhattan Mall on Thursday.

Nearly all of McKennnon's investments regained their pre-recession value last year, with the exception of her home. After watching her spending for two years, she allowed herself some large splurges in 2010, including two elaborate vacations and a new Lexus.

For December, many retailers including Target Corp., Costco Wholesale Corp. and Macy's Inc. reported gains below Wall Street expectations. Clothing chain Gap Inc. suffered a surprise 3 percent drop in December. Analysts had expected a 2.6 percent increase.

Their shares took a beating. Target's stock fell almost 7 percent, while Macy's fell 3 percent. Gap's shares fell more than 7 percent.

More expensive retailers saw better-than-expected sales. Abercrombie & Fitch Co., which saw robust gains that beat Wall Street estimates, though it had to discount to lure shoppers in.

Luxury stores, including Saks Inc. and Nordstrom Inc., also reported big increases as the rallying stock market kept affluent customers spending.

Overall, department stores fared better than mall clothing chains. Discounters such as Target, which were among the top performers in November, saw sales slow in December.

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December's smaller increases underscore the challenges retailers face in getting shoppers back in the malls in the coming months when there are no holidays giving them reasons to spend.

One worry is stores are pushing prices higher starting this spring as they offset higher costs in commodities, particularly cotton. Brooks Brothers Inc. is raising prices on all cotton items by an average of 10 percent, for example.

"This is going to be a real test of wills between the consumer and the retailer," said BMO Capital Markets analyst John Morris.

AP Retail Writer Ellen Gibson in New York contributed to this report.

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