US retail sales unexpectedly flat in December

[WASHINGTON] US retail sales were unexpectedly unchanged in December, putting consumer spending and the overall economy on a slower growth path heading into the new year.

The flat reading in retail sales last month followed an unrevised 0.6 per cent increase in November, the Commerce Department’s Census Bureau on Tuesday (Feb 10). Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation.

The Census Bureau is still catching up on data releases after delays caused by last year’s government shutdown.

Retail had been strong despite consumers being downbeat about the economy amid higher prices from tariffs and a softening labour market. That has come at the expense of saving, with the saving rate falling to a three-year low of 3.5 per cent in November from 3.7 per cent in October. It has dropped from a peak of 31.8 per cent in April 2020. But household wealth has surged, driven by a strong stock market rally and still-high home prices.

Retail sales excluding automobiles, gasoline, building materials and food services fell 0.1 per cent in December after a downwardly revised 0.2 per cent gain 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 advanced 0.4 per cent in November.

December’s drop and the downward revision to November’s data could prompt economists to trim their fourth-quarter estimates for consumer spending and GDP.

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Consumer spending increased at a brisk pace in the third quarter, driving much of the economy’s 4.4 per cent annualised growth pace during that period. The Atlanta Federal Reserve is forecasting GDP increased at a 4.2 per cent rate in the fourth quarter.

The government will published its delayed advance estimate of fourth-quarter GDP next week. REUTERS