US retail sales tumble in December amid shortages

People carrying shopping bags walk inside the King of Prussia mall, as shoppers turn up early for Black Friday sales, in King of Prussia, Pennsylvania, U.S. November 26, 2021. REUTERS /Rachel Wisniewski/File Photo

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  • Retail sales fall 1.9% in December
  • Core retail sales fall 3.1%

WASHINGTON, Jan 14 (Reuters) – U.S. retail sales fell the most in 10 months in December, weighed down by shortages and spiraling COVID-19 infections, which could temper expectations of a strong acceleration of economic growth in the fourth quarter.

Americans started their holiday shopping in October to avoid empty shelves, which pushed December sales away. Sales could weaken further in January as raging coronavirus infections driven by the Omicron variant limit consumer traffic to places like restaurants and bars.

“December’s weakness was likely more related to the timing of spending than the level,” said Scott Hoyt, senior economist at Moody’s Analytics in West Chester, Pennsylvania. “Support comes from job and income growth that is strong by pre-pandemic standards and ample cash and credit available to many consumers.”

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Retail sales fell 1.9% last month, the biggest drop since February 2021, after rising 0.2% in November, the Commerce Department said Friday. Economists polled by Reuters had forecast retail sales unchanged. Estimates ranged from a decline as low as 2.0% to an increase as high as 0.8%.

Unadjusted sales rose 10.0% last month after gaining 2.5% in November. Retail sales, which are mostly goods, rose 16.9% year-on-year in December.

Bottlenecks in supply chains caused by the pandemic have resulted in shortages of goods, including motor vehicles. The increase in sales could also have had an impact on the so-called seasonal factor, the model used by the government to eliminate seasonal fluctuations in the data. The online sales category was the hardest hit by the seasonal factor slowdown, plunging 8.7%.

Receipts at auto dealers fell 0.4% after rising 0.2% in November. Automobiles remain scarce due to a global shortage of semiconductors.

GREAT WEAKNESS

Sales at electronics and appliance stores fell 2.9%. Gasoline station receipts fell 0.7% as gasoline prices retreated from the higher levels seen in previous months. Sales at food and beverage stores fell 0.5%.

Clothing store sales fell 3.1%. There was also a decline in sales at sporting goods, hobby, musical instrument and book stores.

Sales at furniture stores fell 5.5%, while receipts at electronics and appliance stores fell 2.9%. But sales by suppliers of building materials and garden equipment rose 0.9%.

Restaurant and bar receipts fell 0.8%. Restaurants and bars is the only service category in the retail sales report. These sales increased by 41.3% compared to last December.

Excluding automobiles, gasoline, building materials and food services, retail sales fell 3.1%. November data has been revised down to show these so-called core retail sales fell 0.5% instead of falling 0.1% as previously reported.

Core retail sales correspond most closely to the consumer spending component of gross domestic product.

Economists say the rise in core retail sales in October was enough to ensure strong economic growth in the fourth quarter.

“While household spending will be stronger in the fourth quarter compared to the third quarter, the data points to a sharp deceleration heading into the first quarter,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. in White Plains, New York.

Although inflation has outpaced wage gains, spending remains supported by massive savings and increased job security.

Economic growth estimates for the October-December quarter topped an annualized 7.0% ahead of the retail sales data. The economy grew at a 2.3% pace in the third quarter.

Last year’s growth is expected to have been the strongest since 1984.

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Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci

Our standards: The Thomson Reuters Trust Principles.

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