NEW YORK (Reuters) - Retail sales rose more than expected in December as Americans shrugged off the threat of higher taxes and bought automobiles and a range of other goods, suggesting momentum in consumer spending as the year ended.
The Commerce Department said on Tuesday retail sales increased 0.5 percent after an upwardly revised 0.4 percent rise in November. Sales in November were previously reported to have gained 0.3 percent.
Economists polled by Reuters had expected sales to rise only 0.2 percent. Sales were up 4.7 percent from December 2011 and rose 5.2 percent for the whole of 2012.
Manufacturing in New York state contracted for a sixth month in January, pressured by a fall in new orders and shipments, the New York Federal Reserve said in a report on Tuesday.
The New York Fed’s “Empire State” general business conditions index fell to -7.8 from a revised -7.30 the month before. Economists polled by Reuters had expected a flat reading.
New orders fell to -7.2 from -3.4, while shipments fell sharply to -3.1 from 11.9.
U.S. producer prices fell in December for the third straight month as food prices declined by the most in over 1 1/2 years, while a measure of underlying prices pointed to minimal inflation pressures in the economy.
HUGH JOHNSON, CHIEF INVESTMENT OFFICER OF HUGH JOHNSON ADVISORS LLC IN ALBANY, NY:
”There are a lot of numbers and on balance the numbers are in-line with expectations if not, based on the retail sales, somewhat better than expected. The outlier is the Empire State index and that continues to be affected by Hurricane Sandy. So you can not dismiss it entirely, that is admittedly a January number, but it is somewhat clear that New York state is struggling to get back on its feet after Hurricane Sandy. So the fact we’ve had a slow recovery from Hurricane Sandy is not a surprise to me or anybody who lives in the state. So that is one that is an outlier and you can set it aside.
”On balance the numbers are good. Retail sales particularly is the most important of the numbers and that was, on balance, a little bit better than expected. The expectation was for a somewhat softer number. We know that automobile sales were fairly good during the month.
“On balance things look pretty good. Although everyone is interested in every economic number, there is less interest because the focus is on the debt ceiling and negotiations over spending cuts in Washington. In other words, fiscal cliff two is now the principle focus of investors so although there is interest in these numbers, quite frankly the real focus is there. That is why you are not likely to get much of a response to even good numbers.”
Americas Economics and Markets Desk; +1-646 223-6300