Gross sales fall 0.6% as shoppers really feel inflationary pressures

Consumers pulled back spending in November, failing even to keep up with a subdued level of inflation for the month, the Commerce Department reported on Thursday.

Retail sales fell 0.6% for the month, even worse than the Dow Jones estimate of a 0.3% decline. The number is not adjusted for inflation, as measured by the Labor Department’s consumer price index, which rose 0.1% in November, also below expectations.

Measurements excluding autos and both auto and gas sales showed a 0.2% decline.

Shares fell sharply after a mostly disappointing round of economic data released Thursday morning. The Dow Jones Industrial Average lost nearly 500 points in early trading.

The pullback was widespread across all categories. Furniture and interior design stores recorded a minus of 2.6%, building materials and garden centers 2.5% and car and parts dealers 2.3%.

Even with falling gas prices, gas station sales fell by only 0.1%.

Online sales were also down 0.9%, while bars and restaurants were up 0.9% and food and beverage stores were up 0.8%.

Year-over-year, retail sales grew 6.5% compared to a CPI inflation rate of 7.1%.

“With weak global growth and a strong dollar amplifying the domestic drag from higher interest rates, we suspect this weakness bodes well for the future,” wrote Andrew Hunter, chief US economist at Capital Economics, of the retail report.

In other news on Thursday, the Labor Department said weekly jobless claims fell to 211k, down 20k from the previous period and well below the Dow Jones estimate of 232k. Continuing receivables that are one week in arrears rose to 1.671 million.

Also, separate surveys of regional Federal Reserve districts showed a decline in manufacturing activity in December.

The Empire State Manufacturing Survey, which measures activity in the New York area, returned -11.2 versus the -0.5 estimate.

This represents the percentage difference between companies reporting expansion versus contraction. This month’s numbers represented a drop of about 16 points into contraction territory, due in good part to a decline in the General Business Conditions Index. Inventories in the region also fell, although price indices were little changed.

Similarly, the Philadelphia Fed survey rose 6 points but was still negative at -13.8 versus the -12 estimate. Strongly negative values ​​for new orders, unfulfilled orders and delivery times weighed on the index. However, prices for the region fell significantly, both prices paid and measures received fell.

“With exports now suffering from the strong dollar and a global recession looming, we expect further weakness in manufacturing to be on the horizon,” Hunter said.

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