graphic
News > Economy
U.S. retail sales decline
December 13, 2000: 10:28 a.m. ET

November sales drop 0.4%, countering forecasts; ex-autos, sales rise 0.2%
By Staff Writer M. Corey Goldman
graphic
graphic graphic
graphic
NEW YORK (CNNfn) - U.S. retail sales fell last month for the first time since April as shoppers pulled back on purchases at the start of the holiday season and business slumped at auto dealers, the government reported Wednesday.

graphicRetail sales fell 0.4 percent in November, the Commerce Department said, below the 0.2 percent rise forecast by economists polled by Briefing.com and October's revised flat reading. Excluding autos, which account for about a quarter of total sales, sales edged up 0.2 percent last month, a shade below forecasts and the 0.4 percent gain registered a month earlier.

The report offered yet another signal that volatile stock prices, an increasingly shaky employment outlook and expectations for an economic slowdown have convinced consumers to keep a tight grip on their hard-earned cash. Consumer spending accounts for more than two-thirds of total U.S. economic output and is one of the main drivers of the economy.

More importantly, the numbers signaled that the Federal Reserve's series of interest rate increases between June 1999 and this past May have effectively slowed economic growth, enough so that the Fed may begin lowering interest rates in the new year to keep the economy, now in its 10th and record year of uninterrupted expansion, from grinding to a halt.

"The numbers today raise the odds of a rate cut in January," said Paul Christopher, an economist with A.G. Edwards & Sons Inc. in St. Louis. "It looks good for purposes of wondering about the Federal Reserve and what it will do next; it is a signal the Fed is likely to move sooner rather than later."

Fed easing on the horizon

Christopher is anticipating that the Fed will move to a neutral stance on its outlook for inflation when it meets a week from today -- stating publicly that the risks facing the economy are balanced between inflation and recession. He also anticipates that they will lower rates by a quarter point in January.

graphicStocks surged at the opening bell as analysts and investors concluded the same thing: that the U.S. economy in general and U.S. consumers in particular are beginning to respond to the Fed series of rate increases, the last of which was a half-point rate hike in May. The policy setting Federal Open Market Committee gathers for its last meeting of the year on Dec. 19.

Bill Cheney, chief economist with John Hancock Financial Services in Boston, told CNNfn's Before Hours that, while one month of retail sales numbers won't necessarily convince Fed officials to lower rates, it will give them more ammo to move to a neutral directive next week and could convince them to move in the new year. (467KB WAV) (467KB AIFF)

Retail sales have been the focus of much scrutiny in recent weeks as the all-important holiday shopping season hits full swing. However, since a hot start the day after Thanksgiving, the evidence suggests that sales won't be as robust as they were a year ago, when the economy was on fire and the stock market was poised to close out the century at a record.

Retailers and e-commerce companies got mixed reviews from Wall Street analysts Tuesday, with Lehman Brothers giving "outperform" ratings to Gap (GPS: Research, Estimates), Limited (LTD: Research, Estimates), Intimate Brands (IBI: Research, Estimates) and Talbots (TLB: Research, Estimates).

Risks for retail stocks

However, the research firm also noted that there could be a risk for potential sales if the economy continues to rev down. Lehman set a $35 price target for Gap shares, a $26 target for Limited shares, a $21 target for Intimate Brands shares and a $55 target for Talbots shares.

graphicNew-car dealer sales fell for a second straight month, falling 2.2 percent in November after falling 1 percent in October. It was the steepest falloff in auto sales since a 4.9 percent drop in July 1998, and fit with earlier reports from automakers that their annual sales pace was the slowest of the year.

General Motors Corp. (GM: Research, Estimates) Tuesday issued a fourth-quarter profit warning and announced a broad restructuring plan that calls for the company to phase out its Oldsmobile division, cut thousands of jobs and take a one-time charge of up to $2.5 billion -- all due to slowing sales.

Sales at clothing and accessory stores rose 0.8 percent after rising 0.4 percent in October. Sales of building materials rose 0.1 percent after rising 1.4 percent a month earlier. Gasoline service station sales rose 0.3 percent after rising 0.5 percent in October. And sales at restaurants and bars rose 0.2 percent in November after falling 0.2 percent in October.

Separately, the Commerce Department said import prices rose 0.2 percent in November, reflecting further increases in prices of petroleum products. Outside the petroleum sector, import prices fell 0.1 percent, marking the third consecutive month of steady or lower prices. graphic

  RELATED STORIES

Retail sales inch higher - Nov. 14, 2000

  RELATED SITES

U.S. Department of Commerce


Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney




graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.