US Retail Sales Fell in December Deflating Q4 Expectations

U.S. retail sales recorded their largest decline in 11 months in December as demand fell almost across the board, which could temper expectations for a sharp acceleration in consumer spending in the fourth quarter.

The Commerce Department said on Wednesday retail sales fell 0.9 percent last month after a 0.4 percent increase in November.

It was the biggest decline since last January and exceeded economists’ expectations for only a 0.1 percent drop.

 
Excluding automobiles, gasoline, building materials and food services, sales fell 0.4 percent last month after a 0.6 percent rise in November.

Economists expected the so-called core retail sales, which correspond most closely with the consumer spending component of gross domestic product, to rise 0.4 percent last month. Consumer spending accounts for more than two-thirds of U.S. economic activity.

U.S. stock index futures extended losses on the data, while prices for U.S. Treasury debt jumped. The dollar fell to a four-week low against the yen.

December’s surprise decline could dampen expectations for a sharp rise in consumer spending in the final three months of 2014. But with the labor market strengthening and gasoline prices continuing to fall, December’s decline in core retail sales will likely be temporary.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza