US retail sales declined in November by the most in seven months, in a sign of how the economic rebound is faltering amid a resurgence in coronavirus cases and fresh restrictions to curb the spread of the disease.
Retail sales fell 1.1 per cent last month from October, the second consecutive monthly decline, the commerce department said on Wednesday. That was worse than economists’ expectations for a 0.3 per cent decline and followed a 0.1 per cent drop in October.
The report showed a 6.8 per cent month-on-month drop in sales of clothing and accessories and a 3.5 per cent decline in electronics sales. The data were also weighed down by weak automotive and food services sales as people stayed at home amid new limitations on social and business activity introduced in some parts of the country.
So-called control sales, which strip out more volatile items such as food, petrol and building materials, fell 0.5 per cent. Economists had projected a 0.2 per cent increase.
“The fourth warmest November on record wasn’t enough to prevent a consumer spending cold snap,” said Gregory Daco, an economist at Oxford Economics. “With mobility slowing, employment softening and demand hesitant, the holiday season could turn out to be rather miserable.”
The disappointing numbers come at the start of the key holiday shopping season in the US. This year, retailers stretched out promotions to get consumers to loosen their purse strings as early as October.
Data from the National Retail Federation showed that over the five-day period beginning with Thanksgiving and ending on Cyber Monday, shoppers spent an average of $311.75 on holiday-related purchases, down from last year’s total of $361.90.
The US has faced a jump in coronavirus cases in the autumn, and this week the country’s death toll from the pandemic surpassed 300,000, according to Johns Hopkins University. A number of states have reintroduced restrictions to curb the spread of the pandemic, and New York mayor Bill de Blasio earlier this week said the city could face a shutdown after Christmas.
While officials are hopeful that the delivery of the first authorised coronavirus vaccines this week in the US could help turn the page on the pandemic, it will take months before the jabs are widely distributed.
“A tough winter lies ahead, as a significant portion of the job losses we have seen are not going to be temporary, and segments of the service sector face longer-term problems in coping with the effects of the pandemic,” said Joshua Shapiro, chief US economist at consulting firm Maria Fiorini Ramirez.
The US economy added just 245,000 jobs in November, and the rebound in the labour market has moderated in recent months, with jobless claims hovering at historically high levels. Congressional leaders have come under pressure to push through fresh stimulus to help prop up the economy.
The disappointing retail sales data “supports our view that fourth-quarter GDP growth will be less than 4 per cent annualised, with the weak handoff likely to make first-quarter growth even weaker than that”, said Paul Ashworth, economist at Capital Economics. The economy is however, expected to have a stronger rebound in the second quarter.