Humbug holidays: US retail sales drop 1.2 pct. in December

Weak retail data rattles Wall Street

Weak retail data rattles Wall Street

The value of overall sales fell 1.2 per cent from the prior month after a downwardly revised 0.1 per cent increase in November, according to Commerce Department figures released Thursday after a four-week delay due to the shutdown.

So far this year, there have been 2,187 USA store closing announcements, with Gymboree and Ascena Retail, the parent of Lane Bryant and other brands, accounting for more than half the total, according to the research firm.

The year-on-year rate for total sales tells the story, falling almost 2 percentage points to 2.3 percent for its lowest reading since late 2016. Sales at apparel stores fell 0.7 percent in December with department stores down 3.3 percent. Economists surveyed by Bloomberg before Thursday's data had forecast consumption to grow at a 3.4 per cent annualized rate in the fourth quarter and 2.4 per cent in the first three months of this year.

Jack Kleinhenz, chief economist at the National Retail Federation, said that the government's sales figures tell an "incomplete story" and that the group will be in a better position to judge the reliability of the results when officials revise its 2018 data in coming months. But the Commerce Department said the "processing and data quality were monitored throughout and response rates were at or above normal levels for this release". Sales at health and personal care stores dropped 2 percent. Americans also cut spending at restaurants and bars. "These are areas that consumers, if they are anxious, will step back from first".

The discouraging December report raises concern about whether the retail sales slowdown was just a blip or points to a more sustainable weakness in consumer spending.

Growth estimates could be trimmed further after another report from the Commerce Department showed retail inventories excluding automobiles tumbled 1.0 percent in November, the most since December 2008. The longest government shutdown could also have undercut sales. The broad-based weakening reflected lower sales from clothing stores to and gasoline stations. Claims surged to a near 1-1/2-year high of 253,000 in the week ended January 26 and last week's surprise increase suggested some ebbing in labor market conditions. Sales at hobby, musical instrument and book stores plunged 4.9 percent, the biggest drop since September 2008.

Excluding gasoline station sales, which swing widely as pump prices rise and fall, retail sales dropped 0.9 percent in December.

Trump to sign border bill, declare emergency -McConnell
Trump has been demanding US$5.7-billion for the wall from Congress since December as part of a larger government spending bill. Congress should do theirs". "It's not an emergency what's happening at the border - it's a humanitarian challenge to us".

The outlook for consumer spending, which has been underpinned by a strong labor market and cheaper gasoline, is not encouraging. The PPI also fell 0.1 percent in December.

- CBS News' Irina Ivanova contributed reporting.

A separate report Thursday from the Labor Department showed filings for unemployment benefits unexpectedly rose last week, a sign of potential residual effects of the shutdown. But Macy's, J.C. Penney and Kohl's last month reported disappointing holiday sales.

In the 12 months through January, the PPI rose 2.0 percent.

FILE PHOTO: Shoppers wait in line at Lululemon at the King of Prussia Mall, United States' largest retail shopping space, in King of Prussia, Pennsylvania, U.S., December 8, 2018.

"This further corroborates our view that a well-behaved inflationary environment gives the Fed room to remain patient, hiking only once in 2019 and only after a pause in the first half", said Jake McRobie, a USA economist at Oxford Economics in NY.

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