U.S retail sales dip to -0.1% in December

WASHINGTON—Americans curbed their spending at retail stores and restaurants in December, capping off the weakest year for sales growth since the recession ended and raising concerns about consumers’ ability to bolster economic growth.

Sales at retail stores and restaurants fell 0.1% from the prior month to a seasonally adjusted $448.1 billion in December, the Commerce Department said Friday. Compared with a year earlier, sales grew just 2.1% in 2015, the slowest increase in the six-year expansion.

Retail sales rose 0.4% in November, up from an initially reported 0.2% gain.

The decline in overall sales last month matched the expectation of economists surveyed by The Wall Street Journal. But the underlying details of the report, including data used to calculate gross domestic product, were weaker than some economists expected and are likely to drag down fourth-quarter GDP.

“This big December deterioration is not only a fundamental disappointment, but is and will add fuel to the fire of negative U.S. economic perceptions that kicked up along with 2016’s global equity market slide,” Guy LeBas, Janney Montgomery Scott’s chief fixed-income strategist, said in a note to clients.

Consumer spending is a key driver of the U.S. economy, representing more than two-thirds of economic output. Household consumption has helped the economy grow in recent quarters despite a stronger dollar and weak demand overseas, which have weighed on U.S. exporters.

December’s sales slump was broad-based, as consumers spent less on general merchandise, clothing and accessories, groceries and gasoline.

“No way to put lipstick on this pig,” MFR Inc. chief U.S. economist Joshua Shapiro said.

Excluding motor vehicles, sales were down 0.1% in December, and excluding gasoline, sales were unchanged. Excluding both categories, sales were still flat last month.

Retail sales data, which are a key gauge for overall consumer spending, can be volatile from month to month. The report also excludes spending on most services—everything from rent, to doctor visits to a night at the movies—which represents a growing share of consumer outlays.

That means the report may not be a great gauge of real consumer consumption, some economists said.

“There is no question that households chose to spend their marginal dollar on services in 2015 rather than at retail stores,” Amherst Pierpont chief economist Stephen Stanley said in a note to clients. “Thus, the retail sales releases, while they still capture the markets’ attention, have become much less relevant.”

Slumping oil prices have also held down the sales figure over the past year, as consumers spent less at gas stations thanks to lower gasoline prices. In December, sales at gas stations fell 1.1%, and were down 19.4% from a year earlier.

Consumers also spent less over the past year on electronics and appliances, and at department stores.