Decline in retail sales for the third consecutive month

Decline in retail sales for the third consecutive month

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Retail sales fell 0.7% in December compared to the previous month. Economists consulted by Refinitiv expected sales to remain stable. The Commerce Department also revised November retail sales downward, from a 1.1% drop to a 1.4% drop.

America’s economic recovery suffered a blow in the last months of 2020 and the retail sector was not spared. The rise in Covid-19 infections and renewed blocking measures, as well as job losses, weighed on consumer spending and were an obstacle to retail sales. The economy cut 140,000 jobs in December, the first drop since April.

In December, retail sales fell 4.9% in electronics stores compared to the previous month, 0.8% in sporting goods retail and 0.6% in furniture and decoration stores.

They also fell 5.8% at online retailers, the Commerce Department said.

“The further drop in retail sales in December confirms that the continued rise in coronavirus infections is weighing heavily on the economy,” said Andrew Hunter, senior economist at Capital Economics, in a note to customers on Friday.

Despite the recent downturn in consumer spending, retail sales still rose 2.9% in December compared to the same period last year.

Some retailers have already reported holiday sales and results across the industry have been mixed, highlighting the wide gap between retail winners and losers in the pandemic.

Target (TGT) said sales grew 17.2% in November and December compared to last year. But others struggled, like L Brands, the mother of Victoria’s Secret. L Brands’ (LB) sales fell 7% in November and December compared to the same period last year, the company said.

The second pandemic stimulus package signed late last month is expected to help rebound retail sales in January and throughout the first quarter of 2021, Morgan Stanley economists projected in a research report this week.

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