Happy New year…Data show some sputtering
As 2011 closes and we raise the curtain on 2012 economic reports have begun to post some numbers that are more disappointing than encouraging breaking a sting of encouraging reports that has spanned about three-months.
Retail sales disappointed in December, rising by just 0.1%. While this is a correct characterization it is also only part of the story. The December number is preliminary and evidence is that inflation was very low making that low nominal gains worth more in real terms (or volume terms). Also November was revised to a gain of 0.4% from 0.2% initially. Moreover we has strong September October gains that were built upon and did not reveres making the accumulated gains in the Third and fourth quarters quite good. Year-over year sales are strong as well. While the December numbers disappointed we are best off in not taking that too much to heart- it’s not like December produced a devastating decline after all. Sales are still advancing and the course in the value of sales may very well have fallen through the cracks due to inadequate methodology to capture discount buying.
Claims rise sharply by 24K and are up to 399k just short of the 400K mark. But in the last few years claims have also been rising early in the year. Claims are notoriously difficult to get right each and every week. We will look for some context and another weeks work of data before we take seriously the degradation in the trend.
Inventory data from November write a slightly different story about retail sales. In November retail inventory to sales ratios reached a five year low. Obviously compared to what they were expecting this was been some very good news on sales (though Nov). Clothing and accessories as well as General merchandise retailers had ratios in the bottom 30% of their five year range. These statistics suggest that sale in November left stocks relatively lean ahead of the key December selling season.
The OECD LEIs were below 100 for most key nations but that only suggests a slowdown. As of November that Italy was the weakest relative to tis trend and that left the Italian indicator down by just 1.5% relative to trend. China’s trend retailing clung to a trend-even 100 reading. On balance the OECD report which has data though November was not making the call for any recession. In Europe for the most part reports in Europe showed some improvement in December either rising or falling by less. So the OECD still is not pulling the trigger on the recession call even though Germany’s GDP signaled a small decline in its early Q4 estimate.