Retail Sales, PPI See Large Declines
The Commerce Department said that U.S. retail sales fell 3.7% in November to $293.6 billion, following a 6.4% rise in October. This was the largest decrease since the government began keeping records nearly a decade ago and was 0.6% more than predicted, Bloomberg said.
The producer price index, which measures price pressures before they reach the consumer, fell 0.6% in November, as weak demand prevented companies from raising prices, the Labor Department said.
The only glimmer of hope was in the Labor Department’s report that the number of U.S. workers filing for first-time jobless benefits fell by 86,000 to 394,000 for the week ended Dec. 8, compared with a revised 480,000 in the previous week.
xcluding the volatile food and energy groups, the so-called core PPI rose 0.2%. Analysts were expecting only a 0.3% drop in PPI, with no change in the core, Bloomberg said.
Although a falling PPI shows weak demand for goods, which would mean fewer shipments for trucking companies, static inflation could lead to further interest rate cuts by the Federal Reserve to spur economic activity. Earlier this week, the Fed cut rates for the 11th time this year.
The drop in new unemployment claims was the largest since August 1992, and suggests the job market might be improving as the U.S. economy struggles to get out of recession, Reuters said.
owever, the number of workers remaining on jobless benefits for the week ending Dec. 1, rose 36,000 to 3.7 million.
Commerce said that the decline in retail sales was caused in part by fewer consumers buying new autos, following a month that saw a record number of vehicles sold.
Auto sales, which had surged 24.2% in October, fell 11.9% in November. Excluding automobiles, sales fell 0.5% in November after rising 0.8% the month before.
Although nearly every industry saw sales drop, department stores saw 1.5% increase and restaurants reported a 0.1% increase.
Sales at gasoline stations dropped 6.3% in November, a reflection of declining prices for fuel. This was also listed as a reason that the PPI continued its plunge, Labor said. The 0.6% fall in PPI followed a record 1.6% drop in October.
Analysts told Bloomberg that excess capacity is forcing prices down, Bloomberg said. Everything from energy, cars, food and industrial chemicals all were cheaper in November than the month before, Labor said.
This will likely hurt the profits of many companies hoping that were counting on strong holiday sales for a boost, Bloomberg noted.
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