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Last Update: 12-Jan-12 10:41 ET
Retail Sales Soften in December in Contrast to Rising Wages
Retail sales increased 0.1% in December after increasing an upwardly revised 0.4% (from 0.2%) in November. The Briefing.com consensus expected retail sales to increase 0.4%.
Surprisingly, the small decline in the number of motor vehicles sold in December did not reduce sales at motor vehicle and parts dealers. Sales increased 1.5% in December after increasing 0.9% in November.
Excluding motor vehicle sales, retail sales fell 0.2% in December. The consensus expected ex-auto sales to increase 0.3%.
While it is too early to call a prolonged downturn in consumption following one month of negative data, it is concerning that sales weakened at the same time that aggregate earnings jumped 0.7%. It seems consumers increased their savings rate in December, which suggests that consumer debt remains a hindrance for current consumption.
The drop in consumption is most likely just a temporary blip from an ongoing expansion in consumption. Business conditions have notably improved over the last few months. That has led to higher wages, better job security, stronger consumer confidence, and an overall better consumption outlook.
Core retail sales, which exclude the highly volatile motor vehicle dealers, building material and supply dealers, and gasoline stations , declined 0.2%. That was the first drop in core sales since July 2010.
Surprisingly, the small decline in the number of motor vehicles sold in December did not reduce sales at motor vehicle and parts dealers. Sales increased 1.5% in December after increasing 0.9% in November.
Excluding motor vehicle sales, retail sales fell 0.2% in December. The consensus expected ex-auto sales to increase 0.3%.
While it is too early to call a prolonged downturn in consumption following one month of negative data, it is concerning that sales weakened at the same time that aggregate earnings jumped 0.7%. It seems consumers increased their savings rate in December, which suggests that consumer debt remains a hindrance for current consumption.
The drop in consumption is most likely just a temporary blip from an ongoing expansion in consumption. Business conditions have notably improved over the last few months. That has led to higher wages, better job security, stronger consumer confidence, and an overall better consumption outlook.
Core retail sales, which exclude the highly volatile motor vehicle dealers, building material and supply dealers, and gasoline stations , declined 0.2%. That was the first drop in core sales since July 2010.
