Retail Sales: Further Declines in December

Bottom Line:  Retail sales fell moderately in December, down 0.7% at the headline level, even with an increase in gas prices, and down over 2% excluding gasoline.  While consensus was for nearly unchanged, we noted after last week's employment report that job losses in the retail sector had suggested December's activity was sharply lower.  Nonstore retailers (online) saw sharply lower sales.  While the seasonal adjustment expected strong gains and Covid altered shopping patterns, it is important to note that November was also revised lower.  On the plus side, garden and building supply stores saw continued gains (as they have throughout the pandemic) with better than seasonally normal weather in many parts of eh country.  Clothing stores saw a rebound, but electronics retailers saw lower sales again.  And of course, eating and drinking places led the declines with renewed shutdowns in parts of the country and colder weather hampering outdoor dining in many places.  Overall, while the vaccine offers hope for stronger activity later in the year, the consumption trend was lower again in the final months of 2020 and bodes poorly for the start of 2021.

Retail Sales FELL by 0.7% in December,  compared with the market consensus for an increase of 1.0%.
             
The November estimate was revised lower from -1.10% to -1.37%. Retail sales are now 2.9% ABOVE their year-ago level; just a year ago, the year-over-year growth rate was 5.7%. Spending at motor vehicle dealers climbed by 1.9%.
                                 
Core Retail Sales FELL by -1.4%, compared with the market consensus for an increase 1.0%. The November estimate was revised lower from 0.21% to -1.32%. Core retail sales are now 1.1% ABOVE their year-ago level; just a year ago, the year-over-year growth rate was 6.2%.

Core Retail Sales ex Gasoline FELL by 2.07% and are now 2.6% ABOVE their year-ago level; just a year ago, the year over year growth rate was a solid 5.9%.