US retail sales drop in December

US retail sales drop in December
By Alan Rappeport in New York
Copyright The Financial Times Limited 2010
Published: January 14 2010 14:39 | Last updated: January 14 2010 17:23
http://www.ft.com/cms/s/0/73957524-010d-11df-a4cb-00144feabdc0.html


US retail sales unexpectedly fell in December, disappointing hopes that consumers had added momentum to the recovery towards the end of last year.

Separately, new jobless claims ticked up last week while business inventories rose last month, raising optimism for greater economic output.

Sales fell by 0.3 per cent last month, the commerce department said on Thursday. That clashed with expectations of Wall Street analysts, who were expecting a rise – November’s sales were revised up to show a 1.8 per cent increase.

Excluding cars, which tend to be volatile, retail sales were off by 0.2 per cent during December. However, compared with a year ago, sales were up by 5.4 per cent.

Last month, sales were strongest at health and personal care stores, sporting goods and hobby shops and furniture stores. Sales were down at clothing and department stores, and at electronics stores.

Retailers have been generally pleased with their holiday sales, which showed a marked improvement from the grim 2008 shopping season. This week, Tiffany, the US jeweller, said its sales jumped 17 per cent in the final two months of last year compared with the same period in the previous year.

According to Retail Metrics, US retailers notched same-store sales gains of 3 per cent in December, the biggest monthly rise since April 2008. Economists said that Thursday’s dip in sales was likely due to deep holiday discounting that suppressed prices.

Meanwhile, labour department figures showed on Thursday that US jobless claims rose by 11,000 to 444,000. That was a bigger increase than economists had anticipated, although the four-week average of new claims fell by 9,000 to 440,750.

The number of Americans continuing to claim unemployment benefits continued to shrink as benefits expired. Continuing claims declined by 211,000 to 4.6m.

“The labour market overall is less bad than it was, in terms of flows, but it is still very sick,” said Ian Shepherdson, chief US economist at High Frequency Economics.

Business inventories, however, have been showing signs of health in recent months as companies have been replenishing their stocks. The 0.4 per cent monthly increase was the second in a row and the 2 per cent rise in sales was the sharpest increase in two years.