US retail sales fell unexpectedly last month, capping the worst year on record, official data showed on Thursday in a disappointing report on a crucial driver of growth.
The Commerce Department said adjusted retail sales were US$353 billion, a decline of 0.3 percent from November instead of the consensus analyst forecast of a 0.5 percent increase.
“The consumer didn’t hit the stores nearly as much as thought this holiday season, and that’s another indication that the recovery is likely to be sluggish,” Joel Naroff of Naroff Economic Advisors said.
For all of last year, retail sales — a key indicator of consumer spending that drives two-thirds of the country’s economic activity — plunged 6.2 percent from a year ago as consumers snapped wallets shut in the face of high unemployment and economic turmoil.
It was the steepest annual plunge since the data series began in 1992. Sales had slipped a mere 0.5 percent in 2008, the first full year of the worst recession in decades.
“Although we may never see the same pre-crisis propensity of individuals to consume as increasing household saving was a byproduct of the downturn, today’s report was disappointing as it indicated that consumers remain hesitant amid the backdrop of high unemployment and substantially deteriorated net worth,” Charles Schwab & Co analysts said in a note to investors.
The surprise month-over-month decline last month followed a sharp half-point upward revision to November’s rise, to 1.8 percent. The department revised the October sales increase up a notch, to 1.2 percent.
Ian Shepherdson of High Frequency Economics said that November and last month’s data taken together “are not bad at all.”
“We need the January data for a final verdict on the holiday season ,but so far it looks better than the December headlines alone suggest,” he said.
Separately, weak unemployment data underlined the painful conditions in the labor market, where the unemployment rate held at 10 percent last month and employers cut 85,000 jobs.
The seasonally adjusted initial claims for unemployment insurance benefits in the week ending last Saturday stood at 444,000, an increase of 11,000 from the previous week’s revised figure
The economy has shed more than 7 million jobs since the economy officially entered recession in December 2007.
The retail sales report from last month offered signs of improvement that would be key to underpinning the fragile economic recovery.
On a 12-month basis, retail sales rose a hefty 5.4 percent from December 2008, near the height of the global financial crisis.
And fourth-quarter sales were up 1.7 percent from the prior quarter, suggesting a positive contribution by household spending to GDP, a broad measure of goods and services output.
The Commerce Department plans to release the initial estimate of fourth-quarter GDP on Jan. 29.
The world’s largest economy grew 2.8 percent in the third quarter after a year of contraction.
“Real consumer spending is still on track to expand by just under 2.0 percent in the fourth quarter of 2009, and real GDP is still on track to expand by close to 5.0 percent,” said Brian Bethune, chief US financial economist at IHS Global Insight.
Although the full-year decline marked the steepest falloff on record, the fourth-quarter data broadly trended upward, though auto and gasoline sales were flat.
“There is an unusual amount of noise in these monthly numbers related to recent sharp increases in gasoline prices, which tended to push up sales in the past two months, and major discounting by retailers, electronics suppliers and auto companies at the end of the year in order keep inventories lean,” Bethune said.
He said the volatility would probably become “even more apparent” in yesterday’s official data on last month’s consumer prices.
TYPHOON: The storm’s path indicates a high possibility of Krathon making landfall in Pingtung County, depending on when the storm turns north, the CWA said Typhoon Krathon is strengthening and is more likely to make landfall in Taiwan, the Central Weather Administration (CWA) said in a forecast released yesterday afternoon. As of 2pm yesterday, the CWA’s updated sea warning for Krathon showed that the storm was about 430km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point. It was moving in west-northwest at 9kph, with maximum sustained winds of 119kph and gusts of up to 155kph, CWA data showed. Krathon is expected to move further west before turning north tomorrow, CWA forecaster Wu Wan-hua (伍婉華) said. The CWA’s latest forecast and other countries’ projections of the storm’s path indicate a higher
SLOW-MOVING STORM: The typhoon has started moving north, but at a very slow pace, adding uncertainty to the extent of its impact on the nation Work and classes have been canceled across the nation today because of Typhoon Krathon, with residents in the south advised to brace for winds that could reach force 17 on the Beaufort scale as the Central Weather Administration (CWA) forecast that the storm would make landfall there. Force 17 wind with speeds of 56.1 to 61.2 meters per second, the highest number on the Beaufort scale, rarely occur and could cause serious damage. Krathon could be the second typhoon to land in southwestern Taiwan, following typhoon Elsie in 1996, CWA records showed. As of 8pm yesterday, the typhoon’s center was 180km
TYPHOON DAY: Taitung, Pingtung, Tainan, Chiayi, Hualien and Kaohsiung canceled work and classes today. The storm is to start moving north this afternoon The outer rim of Typhoon Krathon made landfall in Taitung County and the Hengchun Peninsula (恆春半島) at about noon yesterday, the Central Weather Administration (CWA) said, adding that the eye of the storm was expected to hit land tomorrow. The CWA at 2:30pm yesterday issued a land alert for Krathon after issuing a sea alert on Sunday. It also expanded the scope of the sea alert to include waters north of Taiwan Strait, in addition to its south, from the Bashi Channel to the Pratas Islands (Dongsha Islands, 東沙群島). As of 6pm yesterday, the typhoon’s center was 160km south of
STILL DANGEROUS: The typhoon was expected to weaken, but it would still maintain its structure, with high winds and heavy rain, the weather agency said One person had died amid heavy winds and rain brought by Typhoon Krathon, while 70 were injured and two people were unaccounted for, the Central Emergency Operation Center said yesterday, while work and classes have been canceled nationwide today for the second day. The Hualien County Fire Department said that a man in his 70s had fallen to his death at about 11am on Tuesday while trimming a tree at his home in Shoufeng Township (壽豐). Meanwhile, the Yunlin County Fire Department received a report of a person falling into the sea at about 1pm on Tuesday, but had to suspend search-and-rescue
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