MNI DATA ANALYSIS: US December Retail Sales Down 1.2%>

--Retail Sales Ex. Motor Vehicle -1.8%; Ex. Mtr Veh and Gas -1.4%

--January PPI Down 0.1%, Ex. Food, Energy Up 0.3%

--Initial Jobless Claims Rise 4,000 To 239,000 In Feb 9 Week

By Kevin Kastner, Shikha Dave, and Harrison Clarke

     WASHINGTON (MNI) - The value of retail sales fell by 1.2% in 

December overall and fell 1.8% excluding motor vehicle sales, well below 

expectations and indicating weakness outside of an expected gasoline 

station sales decline, data released by the Commerce Department Thursday 

showed. 

     In other data released at the same time, January PPI was also 

weaker than expected, falling 0.1% overall. However, there was a 0.3% 

gain excluding food and energy. Initial jobless claims rose 4,000 to 

239,000 in the February 9 week. 

--WIDESPREAD SALES WEAKNESS

     Motor vehicle sales posted a 1.0% increase after November's 0.7% 

gain, while gasoline station sales fell by 5.1% in December after a 4.4% 

drop in November. Excluding both motor vehicles and gasoline, retail 

sales posted a 1.4% decline. 

     Retail sales excluding autos, gasoline, and building materials were 

down 1.6% in December. Further, excluding food services as well as the 

other three measures, retail sales were down 1.7% after a 1.0% gain in 

November due to widespread weakness throughout the retail categories. 

     The only other category posting a gain in December was building 

materials, which rose 0.3% after a 1.5% drop in November. Food services 

and drinking places' sales fell by 0.7%, while clothing stores sales 

also fell by 0.7% in the month. 

     Incorporating the revisions to sales in previous months, fourth 

quarter retail sales were up 1.8% at an annual rate from the third 

quarter average, pointing to forward momentum, but a slower pace than 

seen earlier in the quarter. 

     Sales excluding motor vehicles were up only 0.1%, at an annual rate 

from the previous quarter, while sales excluding autos, building 

materials, and gas were up 0.3%. When food services were also excluded, 

fourth quarter sales were up 1.8% at an annual rate from the third 

quarter, suggesting PCE growth will be slow to end the year. 

--PPI BELOW EXPECTATIONS

     Analysts had expected overall PPI to rise by 0.1% and prices to be 

up 0.2% excluding food and energy prices in January. The reason for the 

headline miss was a stronger than expected decline in energy prices and 

a large decline in food prices. These were partially offset by a strong 

gain for trade services. 

     Energy prices fell 3.8%, food prices fell 1.7%, and trade services 

rose 0.8%. Removing those categories, PPI ex. trade services, food, and 

energy was up 0.2% after a flat reading in the previous month. 

     The year/year rate of inflation for final demand PPI was 2.0%, down 

from 2.5% in December, while PPI ex food and energy was 2.6% year/year, 

slightly below 2.7% in the previous month. The year/year rate for prices 

also excluding the volatile trade services category was 2.5%, down from 

the 2.8% rate in December. 

     The personal consumption price measure in the data, which some 

analysts use as a preview measure for the PCE price index, was down 0.1% 

overall in January, but up 0.3% ex. food and energy, and was flat also 

excluding trade services. 

     These followed modest declines in both overall and ex. food and 

energy PCE prices in December, which suggests no clear risk for the 

December PCE inflation data.  

     Within the core, there were modest upward movements in a number of 

categories. Passenger car prices rose 0.5%, while light truck prices 

rose 0.3%.  

--JOBLESS CLAIMS RISE

     Initial jobless claims increased by 4,000 to 239,000 in the 

February 9 week following a 18,000 decrease in the previous week. After 

a surge to 253,000 in the January 26 week on seasonal adjustment 

difficulties, claims have not yet returned to more normal levels. 

     The four week moving average, a better indicator of the underlying 

trend of claims, rose 6,750 to 231,750, and would likely rise next week 

as the 200,000 level in the January 19 week rolls out of measure. 

     Continuing claims rose by 37,000 to 1.773m in the February 2 

week.

     ** MNI Washington Bureau: 202-371-2121 ** 

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