(Reuters) – U.S. retail sales recorded their largest decline in 11 months in December as demand fell almost across the board, tempering expectations for a sharp acceleration in consumer spending in the fourth quarter.
Economists, however, cautioned against reading too much into the surprise weakness, noting that holiday spending made it difficult to smooth December data for seasonal fluctuations.
“Faulty seasonal adjustments from shifts in holiday spending patterns are probably more to blame for the December decline,” said Steve Blitz, chief economist at ITG in New York. “Looking at the last three months, spending is not collapsing.”
The Commerce Department said on Wednesday retail sales fell 0.9 percent, the biggest decline since last January, after increasing 0.4 percent in November.
Economists had expected only a 0.1 percent drop. Against the backdrop of a strengthening labor market and lower gasoline prices, they said sales should bounce back in January, with some saying December’s decline could be revised away.
Bricklin Dwyer, a senior economist at BNP Paribas in New York, said fewer post-Black Friday shopping days in November than normal threw off the so-called seasonal factor used to adjust the data, resulting in a lower December sales number.
“For January 2015, this seasonal factor will boost sales by the largest factor since 2006,” said Dwyer.
“This combined with the fact that we have seen a massive boost to consumer’s wallets as a result of the rapid decline in gasoline prices, suggests that January could be a big month that reverses much of the December drop,” he said.