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US retail sales weak, cast a cloud on consumer spending

Wednesday, January 14, 2015 - 21:43
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A gauge of US consumer spending unexpectedly fell in December as demand fell almost across the board, but that is probably not the start of a weak trend given lower gasoline prices and a firming labour market.

[WASHINGTON] A gauge of US consumer spending unexpectedly fell in December as demand fell almost across the board, but that is probably not the start of a weak trend given lower gasoline prices and a firming labour market.

The Commerce Department said on Wednesday retail sales excluding automobiles, gasoline, building materials and food services fell 0.4 per cent last month after a 0.6 per cent rise in November.

The so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Economists polled by Reuters had expected core retail sales to rise 0.4 per cent last month.

December's surprise decline could temper expectations that consumer spending, which accounts for more than two-thirds of US economic activity, accelerated sharply in the fourth quarter.

But with the labour market strengthening and gasoline prices continuing to fall, December's decline in core retail sales will likely be temporary.

Core sales last month were weighed down by a 1.6 per cent decline in receipts at electronic and appliance stores, as well as a 0.3 per cent fall in sales at clothing stores. Online sales slipped 0.3 per cent. There were also declines in receipts at sporting goods stores.

Core sales were up 3.2 per cent from a year earlier.

Receipts at furniture stores rose 0.8 per cent in December.

Elsewhere, declining gasoline prices weighed on service station sales, with receipts falling 6.5 per cent - the biggest decline since December 2008.

That decline combined with a 0.7 per cent fall in receipts at auto dealerships to push down overall retail sales 0.9 per cent, the largest decline since January last year.

November retail sales were revised down to show a 0.4 per cent increase instead of the previously reported 0.7 per cent advance.

Sales for building materials and garden equipment fell 1.9 per cent in December, while sales at restaurants and bars rose 0.8 per cent.

REUTERS