Retail sales unexpectedly fall, jobless claims up
WASHINGTON (Reuters) – Sales at U.S. retailers unexpectedly fell in December and applications for jobless benefits rose last week, raising concerns about the durability of the economy’s recovery.
The Commerce Department said on Thursday retail sales fell 0.3 percent last month, the first decline in three months, as consumers spent less on vehicles and an array of other goods during the holiday shopping month.
Sales had increased 1.8 percent in November. Analysts polled by Reuters had forecast retail sales gaining 0.5 percent last month.
A separate report from the Labor Department showed initial claims for state unemployment benefits rose 11,000 to 444,000 last week, higher than the 437,000 claims that analysts surveyed by Reuters had forecast.
“Will consumers be able to take over from the government and replace demand that has come so far from government spending. If the consumer is unable to do that, it’s going to pose some significant risks to the global recovery story,” said Boris Schlossberg, director of research at GFT Forex in New York.
S&P 500 stock index futures turned negative after unexpectedly weak jobless claims and retail sales data. The dollar pared gains against the yen. U.S. government debt prices added to gains.
Compared to December 2008, sales rose 5.4 percent, but fell 6.2 percent for the whole of 2009.
Motor vehicle purchases fell 0.8 percent, while sales at electronics and appliance stores dropped 2.6 percent.
The data, coming in the wake of a report last week showing a surprise drop in non-farm payrolls in December, could add to worries that the economic expansion that started in the third quarter of 2008 could falter once government stimulus ends.
Stubbornly high unemployment remains the weakest link in the recovery from the worst economic downturn since the 1930s. Job worries are expected to constrain consumer spending, which normally accounts for more than two-thirds of economic activity.
But the labor market is showing some signs of healing. The four-week moving average of claims, which smooths out weekly variations dropped for a 19th straight week, declining 9,000 to 440,750, Labor Department data showed.
That was the lowest level for the four-week average of claims in nearly 1-1/2 years, since it was at 440,250 at the end of August 2008.
Excluding motor vehicles and parts, retail sales fell 0.2 percent in December, the biggest decline since July, after rising 1.9 percent the prior month. Economists had expected a 0.3 percent increase.
Core retail sales, which excludes autos, gasoline and building materials, fell 0.3 percent after rising 0.9 percent in November.
The U.S. housing market is still suffering from the downturn. The nation closed out 2009 with a record number of foreclosure actions and is poised to set a fresh record this year, real estate data company RealtryTrac said on Thursday.
It said 2.8 million properties with a mortgage received a foreclosure notice last year, up 21 percent from 2008 and 120 percent from 2007.
Separately, the Mortgage Bankers Association said a surge in demand for home refinancing loans helped push it weekly gauge of mortgage applications up by 14.3 percent last week as interest rates edged down.
(Reporting by Lucia Mutikani and Glenn Somerville; Editing by Neil Stempleman)
