Harassed U.S. retailers saw sales plummet to the lowest level in nine years in December, according to data from the U.S. Department of Commerce.
Sales fell across the board during the holiday season, confirming an unwelcome sharp deceleration in economic activity at the end of 2018. December saw retail sales crash by 1.2 percent, the largest reduction since September 2009 when the U.S. economy was in the Great Recession.
On the other hand, economists forecast December retail sales rising by 0.2 percent. Revised data for November crept higher by 0.1 percent instead of improving 0.2 percent.
The Commerce Department's December retail sales report was delayed by a 35-day partial shutdown of the federal government that ended on Jan. 25. The January sales report will likely not be released this Friday, said Reuters.
Excluding automobiles, gasoline, food services and building materials, retail sales fell 1.7 percent in December after an upwardly revised 1.0 percent surge in November. Core retail sales jumped 0.9 percent in November but fell in December.
December's sharp drop in core retail sales indicated a weakening in the pace of consumer spending in the fourth quarter. Consumer spending accounts for more than two-thirds of the U.S. economy. It rose at a 3.5 percent annualized rate in the July-September quarter.
In December, online and mail-order retail sales fell 3.9 percent, which is the biggest drop since November 2008. It rose 2.8 percent in November, however. Receipts at service stations plummeted 5.1 percent, the biggest drop since February 2016 because of cheaper gasoline prices.There were also declines in receipts at clothing and furniture stores.
Receipts at restaurants and bars stumbled 0.7 percent. Spending at hobby, musical instrument and book stores plunged 4.9 percent, the heftiest drop since September 2008.
Sales at auto dealerships rose 1.0 percent in December after rising 0.7 percent in November. Sales at building material stores rose 0.3 percent.
The U.S. retail industry is also bracing for a new wave of retail store closures that might see more than 2,000 outlets go out of business this year.
Retailers announced 2,187 new store closures on Jan. 1. This total is 23 percent larger than the number of announcements documented at the same time in 2018, said a report from Coresight Research.
The report also said "potentially many more (store closures are) on the way due to companies currently in the bankruptcy process and more on the horizon." Department store chains and specialty apparel retailers are the two retail categories expected to shrink this year and the next.
