U.S. retail sales post largest drop since 2009; jobless claims up

WASHINGTON (Reuters) - U.S. retail sales recorded their biggest drop in more than nine years in December as receipts fell across the board, suggesting a sharp slowdown in economic activity at the end of 2018.

The economy’s outlook was further dimmed by other data on Thursday showing an unexpected increase in the number of Americans filing claims for unemployment benefits last week. That pushed the four-week moving average of claims to a one-year high, an indication that job growth was moderating.

There was also little sign of inflation in the economy, with producer prices dropping in January for a second straight month. Moderate inflation and softening domestic demand support the Federal Reserve’s pledge to be “patient” before raising interest rates further this year.

“This suggests that the word ‘patience’ will be in the Fed’s vernacular for some time,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.

The Commerce Department said retail sales tumbled 1.2 percent, the largest decline since September 2009 when the economy was emerging from recession. Data for November was revised slightly down to show retail sales edging up 0.1 percent instead of gaining 0.2 percent as previously reported.

Economists polled by Reuters had forecast retail sales increasing 0.2 percent in December. Retail sales in December rose 2.3 percent from a year ago.

The December retail sales report was delayed by a 35-day partial shutdown of the federal government that ended on Jan. 25. No date has been set for the release of the January retail sales report, which was scheduled for publication on Friday.

The plunge in retail sales came amid a sharp stock market sell-off and drop in consumer confidence in December. The longest government shutdown could also have undercut sales.

Some economists questioned the credibility of the report, arguing that the shutdown could have impacted on the collection of data. 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.”

Excluding automobiles, gasoline, building materials and food services, retail sales dropped 1.7 percent last month after an upwardly revised 1.0 percent surge in November. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously reported to have jumped 0.9 percent in November.

December’s sharp drop in core retail sales suggested a moderation in the pace of consumer spending in the fourth quarter. Consumer spending, which accounts for more than two-thirds of the U.S. economy, increased at a 3.5 percent annualized rate in the July-September quarter.

As result of the weak retail sales report, economists slashed their fourth-quarter gross domestic product growth estimates by as much as seven-tenths of a percentage point to as low as a 2.0 percent rate.

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 economy grew at a 3.4 percent pace in the July-September period. U.S. Treasury prices rose on the data, while the dollar fell to session lows against a basket of currencies. Stocks were trading lower.

BROAD WEAKNESS

In December, online and mail-order retail sales dropped 3.9 percent, the biggest drop since November 2008. Receipts at service stations dived 5.1 percent, the biggest fall since February 2016, reflecting cheaper gasoline prices.

There were also declines in receipts at clothing and furniture stores. Americans also cut spending at restaurants and bars. Sales at hobby, musical instrument and book stores plunged 4.9 percent, the biggest drop since September 2008.

But sales at auto dealerships rose 1.0 percent in December and receipts at building material stores gained 0.3 percent.

The outlook for consumer spending, which has been underpinned by a strong labor market and cheaper gasoline, is not encouraging. A report this week from the New York Fed showed the overall debt shouldered by Americans edged up to a record $13.5 trillion in the fourth quarter of 2018.

In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 239,000 for the week ended Feb. 9.

Economists had forecast claims falling to 225,000 in the latest week. Claims surged to a near 1-1/2-year high of 253,000 in the week ended Jan. 26 and last week’s surprise increase suggested some ebbing in labor market conditions.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 6,750 to 231,750 last week, the highest level since January 2018.

In another report on Thursday, the Labor Department said its producer price index for final demand dipped 0.1 percent last month as the cost of energy products and food fell. The PPI dipped 0.1 percent in December.

In the 12 months through January, the PPI rose 2.0 percent. That was the smallest gain since July 2017 and followed a 2.5 percent rise in December. Economists had forecast the PPI edging up 0.1 percent in January and increasing 2.1 percent on a year-on-year basis.

The PPI report came on the heels of data on Wednesday showing consumer prices were unchanged in January for a third straight month.

Reporting by Lucia Mutikani; Editing by Andrea Ricci

Panorama Hispano is the regional news and information newspaper for Hispanic and other diverse communities.

US Hispanics are now the largest ethnic minority in the United States numbering 54.2 million as of July 2014. Serving: Buffalo, Rochester, Fredonia, Niagara Falls, NY and Erie, PA. Outside our Market area: Visit our affiliate at: http://www.impremedia.com/

Contact us: Contact@PanoramaHispanoNews.com

Featured News

Mar 3, 2021
Papa Francisco afronta en Irak su viaje más arriesgado

El viaje que realizará el papa Francisco a Irak el próximo viernes, el número 33º de su pontificado, es un viejo empeño que ya fue cancelado el año pasado por la pandemia. También fue un sueño de Juan Pablo II que jamás llegó a realizar. Un encuentro pastoral y de acompañamiento a las minorías cristianas […]

Read More
Mar 3, 2021
US forces: Rockets hit airbase in Iraq hosting US troops

BAGHDAD (AP) — At least 10 rockets targeted a military base in western Iraq that hosts U.S.-led coalition troops on Wednesday, the coalition and the Iraqi military said. It was not immediately known if there were any casualties. The rockets struck Ain al-Asad airbase in Anbar province at 7:20 a.m., coalition spokesman Col. Wayne Marotto […]

Read More
Mar 3, 2021
33 years later, Eddie Murphy, Arsenio Hall return to Zamunda

NEW YORK (AP) — When Eddie Murphy made the original “Coming to America,” he was, almost indisputably, the funniest man in America. Murphy was at the very height of his fame, coming off “Beverly Hills Cop II” and the stand-up special “Raw.” They were heady times. Arsenio Hall, Murphy’s longtime friend and co-star in “Coming […]

Read More

popular categories

Copyright © 2021 Panorama Hispano News. All Rights Reserved.
crossmenuchevron-downmenu-circlecross-circle
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram