US retail sales recorded their largest decline in 11 months in December as demand fell almost across the board, which could temper expectations for a sharp acceleration in consumer spending in the fourth quarter.
The Commerce Department said yesterday retail sales fell 0.9 per cent last month after a 0.4 per cent increase in November.
It was the biggest decline since last January and exceeded economists’ expectations for only a 0.1 per cent drop.
Excluding automobiles, gasoline, building materials and food services, sales fell 0.4 per cent last month after a 0.6 per cent rise in November.
Economists expected the so-called core retail sales, which correspond most closely with the consumer spending component of gross domestic product, to rise 0.4 per cent last month. Consumer spending accounts for more than two-thirds of US economic activity.
December’s surprise decline could dampen expectations for a sharp rise in consumer spending in the final three months of 2014.
But with the labour market strengthening and gasoline prices continuing to fall, December’s decline in core retail sales will likely be temporary.
The weak retail sales could lead some economists to expect that the Federal Reserve will delay its first interest rate hike to later in the year as opposed to June as many currently anticipate.