US retail sees biggest drop in nearly 10 years

Retail spending by American consumers plunged unexpectedly during December’s key holiday shopping period, suffering its largest onemonth drop in almost a decade, government data showed yesterday. While 2018 overall was a strong year and much of the decline was due to falling gasoline prices, the sudden frugality of the US consumer could weigh on estimates for GDP growth in the year’s final quarter.

The auto sector was a bright spot, however. For the month, retail spending tallied at $505.8 billion, seasonally adjusted, a 1.2 per cent dip from the previous month, marking the largest month-to-month decrease since September 2009. Economists had instead been expecting a token increase of 0.1pc. The surprise retail weakness sent Wall Street into the red, with the Dow Jones tumbling at the open and down 0.5 percent shortly before 1600 GMT.

The Commerce Department data, which had been delayed by the record five-week government shutdown, was held down by nose-diving sales at gasoline stations, where fuel prices have fallen sharply in recent months. But consumers also held off spending at online retailers, bars and restaurants and department stores as well as at furniture and clothing outlets. The level followed a downward revision for November but still put still sales up 2.3pc above December 2017.