Sandy Skews Sales, Energy Prices Fall, Claims Drop
- November Retail Sales increased by 0.3 percent, weighed down by service station sales.
- Ex-auto Retail Sales were unchanged. Motor vehicles and parts sales increased by 1.4 percent.
- The Producer Price Index for November dropped by 0.8 percent as energy prices fell.
- Initial Claims for Unemployment Insurance decreased by 29,000 for the week ending December 8.
The impact of Hurricane Sandy on economic data is visible in today’s releases. Retail sales for November increased by 0.3 percent. We already knew that unit auto sales spiked in November, up to a 15.5 million unit rate as storm-damaged cars were replaced. In today’s retail sales report motor vehicle and parts sales were up 1.4 percent for the month, which looks light compared to the unit sales numbers. Building materials sales gained 1.6 percent, possibly bumped up by storm-related preparation and repair activities. Gasoline station sales dropped 4.0 percent. Gasoline prices have been falling, but delivery bottlenecks after Hurricane Sandy in some East Coast areas may have also weighed on sales volumes. Other components of retail sales that may not have been as affected by the storm look relatively solid. Electronics and appliance store sales gained 2.5 percent, likely boosted by the iPhone5. Health and personal care store sales gained 0.6 percent. Clothing stores gained 0.9 percent and sporting goods stores were up 0.5 percent. So the November retail numbers look relatively solid through the noise. However, we have seen a big drop in consumer sentiment in early December, as media coverage of the Fiscal Cliff debate in Washington intensified.
The producer price index for finished goods fell by 0.8 percent in November, largely reflecting a drop in energy prices. The energy price index was down 4.6 percent for the month. Core price levels remain flat. The finished goods PPI excluding food and energy was up just 0.1 percent in November, little changed from where it was last July. Easing energy prices and cool demand has kept the pressure off of overall price levels, giving the Federal Reserve more maneuvering room to ramp up monetary stimulus. Initial claims for unemployment insurance fell by 29,000 for the week ending December 8 to hit 343,000. This nearly matches the pre-Sandy low of 342,000 for the week ending October 6. It is too early to say that initial claims are back on an improving trend, especially given the somewhat sour recent consumer and business sentiment numbers.
Market Reaction: Equity markets opened with losses. Treasury yields are up at both ends of the yield curve. NYMEX crude oil is down to $86.36/barrel. The dollar is up against the yen and down versus the euro.
Click here for a PDF version of the Comerica Economic Alert: Retail Sales 121312.