United States retail sales dipped in December; low gas prices key factor

“Core prices are following headline producer inflation lower”, said FTN Financial.

The Commerce Department said on Friday retail sales slipped 0.1 percent after an upwardly revised 0.4 percent gain in November.

Producer prices fell 1.0 percent in 2015, the weakest since the series started in 2010, after rising 0.9 percent in 2014.

The figures used to calculate gross domestic product, which exclude categories such as food services, auto dealers, home-improvement stores and service stations, unexpectedly dropped 0.3 percent, the biggest decrease since February, after the prior month’s 0.5 percent increase in the so-called retail control group that was smaller than previously estimated.

Retail sales data, which are a key gauge for overall consumer spending, can be volatile from month to month.

The economy has been hammered by a strong dollar and sluggish global demand, which have undermined manufacturing and export-oriented industries. Business efforts to cut an inventory overhang and energy sector spending cuts have also been a drag.

The growth is the slowest since 2013, when sales in the year-end period rose 2.7%.

For the fourth quarter as a whole, industrial production fell at an annual rate of 3.4 percent.

Core retail sales previously were reported to have advanced 0.6 per cent in November. For all of 2015, purchases climbed 2.1 percent, the smallest advance of the current economic expansion.

Subsequently, excluding auto sales, retail sales still dipped by 0.1 percent in December after climbing by 0.3 percent in November.

The so-called core PPI was up 0.3 percent in the 12 months through December.

Receipts at gasoline stations dropped 1.1 percent.

December’s sales slump was broad-based, as consumers spent less on general merchandise, clothing and accessories, groceries and gasoline.

But there were pockets of strength.

The NRF said e-commerce sales increased 9% to $105 billion, more than the 6% to 8% growth it had predicted.

Bricklin Dwyer, an economist at the bank BNP Paribas, suggested that an unusually warm December likely hurt clothing store sales and encouraged spending on building supplies. It is also far short of last year’s results, when sales rose 4.1%.