October 8, 2024

Labor and Retail Data Shows Economic Slippage

Separately, the Commerce Department said retail sales rose at the weakest pace in seven months in December, as consumers pulled back toward the end of the holiday shopping season, cutting purchases at department stores and spending less on electronics.

The retail sales data suggests “that spending isn’t really picking up any momentum,” said Sean Incremona, an economist at 4Cast in New York.

Robust factory output and improved hiring have fed the view that the economy has so far resisted a global slowdown as the euro zone grapples with a likely recession.

Initial claims for unemployment benefits rose to 399,000 in the first week of 2012, the highest in six weeks, from an upwardly revised 375,000 a week earlier. The four-week average of claims was also higher, rising to 381,750 from 374,000.

The Labor Department report also showed 3.63 million continuing claims, up from 3.61 million.

Including the millions of workers receiving aid under emergency federal programs, some 7.3 million Americans were receiving unemployment benefits as of Dec. 24, the most recent date for which comprehensive figures were available.

However, analysts said the government might have had trouble adjusting the claims for seasonal fluctuations after the holiday shopping season.

“We continue to view the labor market as gradually gaining momentum,” said Troy Davig, an economist at Barclays Capital.

The unemployment rate in the United States has fallen sharply in recent months, to 8.5 percent in December, but some economists suspect the drop has in part resulted from discouraged workers dropping out of the labor force.

The Commerce Department said total retail sales increased 0.1 percent in December, after rising by an upwardly revised 0.4 percent in November.

Core retail sales, which exclude autos, gasoline and building materials, declined 0.1 percent in December, after advancing 0.3 percent a month earlier. Core sales correspond most closely with the consumer spending component of the government’s gross domestic product report.

Within the retail report, the government revised upward its estimate for November sales growth to 0.4 percent, suggesting consumers frontloaded their holiday shopping as retailers discounted heavily and extended store hours in the days after Thanksgiving. The government had initially estimated retail sales rose 0.2 percent in November.

By the end of the season, however, consumers cut back, with spending at electronics and appliance stores down 3.9 percent in December. Shopping at department stores slipped 0.2 percent.

Heavy discounting may have depressed retail sales for the entire season, said a JPMorgan economist, Michael Feroli, who also speculated that the slowdown in December could be because consumers realized they had spent too much in previous months.

A recent drop in the saving rate has led many economists to think American shoppers were getting ahead of themselves.

A 1.5 percent increase in sales of motor vehicles and parts helped lift the retail sector in December. Excluding autos, retail sales fell 0.2 percent, the first decline since May 2010.

Another government report showed business inventories rose 0.3 percent in November, reinforcing the view that fourth-quarter economic growth could get a lift as companies restock their shelves.

A wave of foreclosures has kept downward pressure on home prices, although a report from the real estate data firm RealtyTrac on Thursday showed foreclosure activity slowed last year as lenders tried to clean up problems in the foreclosure process, like the “robo-signing” of loan documents.

Article source: http://feeds.nytimes.com/click.phdo?i=cba16459b87ee3d5ea0d0f5bf0661157