Retail Sales, Unemployment Figures Fall
Retail sales posted a surprising drop during November in the approach to the Christmas shopping season, the government said Thursday, while prices that consumers paid for everything from food to clothing rose modestly.
Dragged down by a plunge in new-car sales, overall retail sales fell 0.4% in November to a seasonally adjusted $206.1 billion. Analysts had expected an increase.
It was the first sales decline since a 0.1% fall in August and it followed a 0.3% October rise, the Commerce Department said. Excluding automobiles, November sales were up a slim 0.3% after a 0.4% October gain.
Separately, the Labor Department said its consumer price index registered a 0.3% rise last month, the same as in October, but rose only 0.2% once volatile food and energy costs were stripped out.
Analysts said the reports portray an economy expanding slowly but steadily, still free of the threat of stronger inflation and highly unlikely to force Federal Reserve Board policymakers to boost interest rates as a restraint on growth when they meet next week.
“Basically, we continue to have an economy growing in line with trend growth, not too fast and not too slow, consistent with inflation containment,” said Robert Dederick, an economic consultant to Northern Trust Co. in Chicago.
On Wall Street, the retail report renewed concern that stock prices are higher than justified by prospects for corporate earnings. The Dow Jones industrial average lost nearly 100 points, but bond prices were slightly higher.
Another report Thursday from the Labor Department showed a sharp plunge in new claims for unemployment benefits last week--to 317,000 from 330,000 in the prior week--underlining solid labor markets and plentiful jobs.
Strong job markets often bring demands for higher wages that can push up prices. But analysts said ample supplies of cheap consumer goods from countries such as China and spending restraint by shoppers have kept a lid on prices in stores and factories.
Exceptionally weak auto dealer sales were the key reason for the falloff in November retail sales, though there were ample other indications of consumer tight-fistedness.
Auto dealer sales plummeted 2.6% to $49.5 billion--the biggest drop since a 3.5% fall in April. Auto sales had risen a slight 0.1% in October.
New cars account for about a fifth of total retail sales, so swings in demand strongly affect the overall monthly figures. Excluding cars, retail sales were up 0.3% last month after gaining 0.4% in October.
The retail industry shook off slow November sales and predicted a bounce-back in December as Christmas approaches.
Thanksgiving Day came later this year than last, so the traditional post-Thanksgiving holiday sales season got a late start.
Sales of all types of durable goods, from cars to hardware to building materials, fell 1.1% in November to $83.5 billion, after rising 0.3% in October. Sales of nondurable goods such as food and clothing edged up 0.1% to $122.5 billion, following a 0.4% October increase.
Sales by general merchandise stores fell 0.6% to $25.8 billion, after a 0.4% gain in October. At apparel stores, sales of clothing dropped 0.9% to $9.4 billion, after falling 0.6% in October.
The report on consumer price rises was widely seen as reassuring evidence that inflation was dormant at the consumer level as well as among producers. On Wednesday, the Labor Department said producer prices rose 0.4% in November but were up just a mild 0.1% excluding energy costs.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Consumer Prices
Percentage change, month to month, seasonally adjusted:
Nov. 1996: 0.3%
Source: Bureau of Labor Statistics
