COVID-19 puts pressure on US retail sales; Manufacturing shines

WASHINGTON (Reuters) – US retail sales fell for a third month in December as new measures to slow down the spread of COVID-19 triggered job losses, further evidence that the injured economy hit the 2020s In the end it lost a lot of momentum.

The drop in sales reported by the Commerce Department on Friday, however, is unlikely to push the economy into recession, with other figures showing production in factories last month. It is also feared that about $ 900 billion of backstop will be provided in additional epidemic relief offered by the government in late December.

The spreading economic momentum in the new economic year could persuade the US Congress to agree to a presidential election, which is Biden’s ambitious $ 1.9 trillion fiscal stimulus plan, including a virus response and direct relief to households . Small businesses.

“This should prepare Congress to deal with Biden’s wish list,” said Steven Blitz, chief American economist at TS Lombard in New York. “Important to Biden’s story that the virus itself is causing a recession, there are no fundamental problems with the economy, and that needs to be done to address it.”

Retail sales declined 0.7% in the last month. As previously reported, the data for November was revised to show 1.4% of sales instead of 1.1%. Sales rose 2.9% on a year-on-year basis.

Restaurants and bars declined by 4.5% in sales and monthly declines after several authorities banned indoor dining during the holiday season. Online sales fell 5.8%. Receipts at electronics and appliance stores were down 4.9%.

Consumers also cut spending on sporting goods, hobbies, musical instruments and book stores as well as beverage shops. There is a 1.9% drop in sales at auto dealerships and a 2.4% increase in receipts at clothing stores. Sales of building materials shops, as well as health and personal care shops, also took place.

Excluding automobiles, gasoline, construction materials and food services, retail sales saw a 1.1% decline in November, after a 1.9% drop last month. These so-called core retail sales most closely coincide with the consumer spending component of GDP. They were previously projected to decrease by 0.5% in November.

Lida Bossaur, a senior economist at Oxford Economics in New York, said, “There were too many criminals ruining the sense of leisure, including the dreaded health condition, rising layoffs, and reckless profit lapses.” “Biden’s ambitious fiscal agenda juices domestic spending during the fragile vaccine rollout phase.”

FILE PHOTO: A woman continues the global outbreak of Nike’s shopping bags carovirus disease (COVID-19) at the City Shopping Outlet Mall in Commerce, California, USA until December 3, 2020. REUTERS / Lucy Nicholson / File Photo

Optimism over the distribution of vaccines in early January limited the decline in consumer sentiment after supporters of President Donald Trump ascended the US Capitol in an effort to prevent lawmakers from certifying Biden’s victory in the November 3 election. The University of Michigan, in a second report on Friday, said the consumer sentiment index peaked at 79.2 from its final reading of 80.7 in December.

US stocks were trading lower. A basket of currencies was received in dollars. US Treasury prices rose.

job losses

The decline in core retail sales prompted economists to cut their consumer spending and GDP growth projections for the fourth quarter. The government reported last week that the economy hit jobs in December for the first time in eight months. Further job losses are likely in January, as new claims for unemployment benefits have increased in the first week of the month.

The government is largely unemployed behind the coronovirus infection and delayed and loss of economic momentum by the government to approve more funding to help. The growth estimate for the fourth quarter is around the 5% annualized rate, largely reflecting an inventory build, boosting manufacturing.

After contracting at a pace of 31.4% in the April-June quarter, the economy grew at a 33.4% rate in the third quarter, the government began to record in 1947.

The Federal Reserve said in a third report on Friday that manufacturing output rose 0.9% last month, after rising 0.8% in November. This was the eighth straight monthly profit in factory production. Manufacturing is being supported by the shift in demand for goods from services.

Production in factories increased by 11.2% in the fourth quarter.

“Manufacturing is clearly predicting a wave of better COVID-19 cases than this year,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “Manufacturers are busy, as inventory needs to be rebuilt and demand for consumer goods still remains strong.”

A fourth report from the Department of Commerce showed that trade inventories increased by 0.5% in November.

Although economic growth is slowing, inflation is rising, according to a fifth report by the Department of Labor, the producer price index for the final price in demand rose 0.3% in November and declined 0.1% in November.

“Additional government spending, as well as a fully reopened demand for the economy that will bring back all of the demand, are all factors that will drive inflation in the coming months,” Chief of High Frequency Economics in New York’s White Plains US economist Rubella Farooqui said.

Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao


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