After reporting a sharp increase in U.S. retail sales in the previous month, the Commerce Department released a report on Thursday showing retail sales pulled back by much more than expected in the month of November.
The Commerce Department said retail sales slid by 0.6 percent in November after surging by 1.3 percent in October. Economists had expected retail sales to edge down by 0.1 percent.
Andrew Hunter, Senior U.S. Economist at Capital Economics said the pullback in retail sales suggests “the resilience of consumers to much higher interest rates is starting to crumble.”
“Solid gains in previous months mean real consumption growth should still be strong in the fourth quarter as a whole, but we continue to expect the economy to slip into a mild recession in the first half of next year as the Fed’s relentless hawkishness takes its toll,” Hunter added.
The bigger than expected decrease in retail sales was partly due to a sharp pullback in sales in motor vehicle and parts dealers, which plunged by 2.3 percent in November after spiking by 1.3 percent in October.
Excluding the steep drop in auto sales, retail sales slipped by 0.2 percent in November after jumping by 1.2 percent in October. Ex-auto sales were expected to inch up by 0.2 percent.
The unexpected dip in ex-auto sales reflected substantial decreases in sales by department stores, furniture and home furnishings stores, building material, garden equipment and supplies dealers and electronics and appliance stores.
Meanwhile, notable increases in sales by food services and drinking places, grocery stores and health and personal care stores helped limit the downside.
The report showed closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, edged down by 0.2 percent in November after climbing by 0.5 percent in October.
Source: Read Full Article