Investing.com - US retail sales increased at a slower-than-anticipated month-on-month rate in December, in the latest data point that could paint a picture of the state of the American economy heading into the new year.
Retail sales grew by 0.4% last month, decelerating from an upwardly revised pace of 0.8% in November, according to Commerce Department numbers on Thursday. Economists had called for a reading of 0.6%.
Spending at automotive dealerships eased and expenditures on building material and garden equipment store sales fell by 2%. Gasoline station sales rebounded by 1.5% on a monthly basis, although analysts at Capital Economics noted that this was less than expected given a recent jump in gas prices.
However, receipts of sporting goods, hobby, musical instrument and book stores jumped during the key pre-Christmas shopping season.
In a note to clients, the analysts at Capital Economics led by Chief North America Economist Paul Ashworth said that while the retail sales figure was weaker than projected, it was still strong enough to boost their expectations for fourth-quarter growth.
The number also represents "a strong handover to the first quarter, when we expect consumption growth to slow only modestly, particularly if households increase spending in an attempt to front-run likely tariffs," Ashworth said, referring to sweeping import levies proposed by the incoming Trump administration.
Elsewhere, the number of Americans filing for unemployment benefits ticked up by more than expected to 217,000 in the week ending on January 11, rising from an upwardly revised mark of 203,000 in the previous week, the Labor Department said. Economists had seen the figure at 210,000.
The four-week moving average of jobless claims, which aims to account for volatility in the weekly number, decreased by 750 to 212,750.
Meanwhile, a regional factory index from the Philadelphia Federal Reserve came in at 44.3 in January, far above the prior month’s level of negative 10.9 and forecasts of negative 5.0. The reading, which indicates an expansion in manufacturing activity, was the highest since April 2021 and the largest monthly uptick since June 2020. Gauges of new orders, shipments, prices paid, and prices received all moved higher.
Taken together, analysts at Vital Knowledge argued that while the deluge of numbers do not "shift the narrative a ton" around the Federal Reserve interest rate policy outlook this year, "the takeaway is hawkish." Investors have been eyeing data this week to assess how the Fed, which slashed rates by a full percentage point in 2024, may approach further potential cuts this year.