Despite encouraging media reports suggesting that Christmas sales were strong, US retail sales disappointed for a second straight month in December. On a monthly basis, retail sales rose only marginally in December, by 0.1% M/M, while an increase by 0.3% M/M was expected. Encouraging on the contrary was an upward revision in the December data, from 0.2% M/M to 0.4% M/M. Looking at the details, sales of motor vehicles & parts (1.5% M/M), building materials (1.6% M/M), furniture (1.0% M/M), clothing (0.7% M/M), eating & drinking (0.7% M/M), health & personal care (0.6% M/M) and sporting goods (0.4% M/M) rose solidly in December. But strength in those components was mitigated by weakness in sales of electronics (-3.9% M/M), gasoline stations (-1.6% M/M), general merchandise (-0.4% M/M), non-store retailers (-0.4% M/M) and food & beverages (-0.2% M/M). As a result, core retail sales, which exclude autos and gas, stabilized after rising for 16 consecutive months. This outcome is in sharp contrast with the media, reporting strong holiday shopping. Especially the decline in non-store retailers comes as a surprise to us after the payrolls report on Friday suggested strong online sales, which might indicate some difficulties in seasonal adjustment factors. Overall however, there is no reason to panic, after the strong retail sales data in the previous months.
In the week ended the 7th of January, US initial jobless claims rose from an upwardly revised 375 000 to 399 000, while the consensus was looking for only a marginal increase. The four-week moving average edged up too, rising from 374 000 to 381 750. The week under review was still distorted by the holidays, which adds some uncertainty to the data. Nevertheless, it is disappointing that claims edged again up toward the 400 000 level, while we expected them to return back to the pre-holidays levels (around 365 000). If confirmed in the coming months, it indicates that hiring at the end of the year was only temporary and was (partly) reversed at the start of the new year. Continuing claims, which are reported with an extra week lag, surprised on the upside too. In the week ended the 31st of December, continuing claims rose by 19 000, from an upwardly revised 3 609 000 to 3 628 000.