Cold weather chills retail sales, jobless claims up

WASHINGTON Thu Feb 13, 2014 5:30pm EST

1 of 3. People walk along 5th Avenue as they shop for bargains the day after Christmas in New York, December 26, 2013.

Credit: Reuters/Carlo Allegri

Related Video

Video

Retail sales iced

Thu, Feb 13 2014

WASHINGTON (Reuters) - U.S. retail sales fell unexpectedly in January and more Americans filed for jobless benefits last week, the latest signs the economy started the year on softer footing as unseasonably cold weather took its toll.

Large parts of the country have been gripped by freezing temperatures and snow storms, which have been blamed for weak hiring over the past two months. Economists, however, are not worried yet and look for a rebound in the second quarter.

"Today's data unequivocally show that the unusually cold winter weather is weighing on economic activity. Consumer spending has literally frozen," said Harm Bandholz, chief economist at UniCredit Research in New York.

Retail sales fell 0.4 percent last month, led by a tumble in automobile sales and categories like clothing, furniture stores and restaurants that depend of foot traffic. Economists had expected retail sales to hold steady.

Adding to the report's weak tone, December sales were revised to show a 0.1 percent dip. They had previously been reported to have increased 0.2 percent.

Investors on Wall Street discounted the weak data, with U.S. stocks up marginally in morning trade. The dollar fell, while prices for U.S. government debt rose.

"It's still too early to conclude that the soft patch is a more ominous sign of a more meaningful slowdown in the economy," said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.

DEMAND A BIT COOLER

While the two straight months of declining sales most likely reflected frigid temperatures, there were also signs of general weakness creeping in as online sales also fell.

Stripping out automobiles, gasoline, building materials and food services, so-called core sales fell 0.3 percent. Core sales for December were revised to only a 0.3 percent rise from a previously reported 0.7 percent advance. November's core sales figure was also revised down.

Core sales correspond most closely with the consumer spending component of gross domestic product.

The downward revisions to November and December core sales suggest that fourth-quarter consumer spending and economic growth were not as strong as initially thought.

In its first estimate of fourth-quarter GDP, the government said the economy grew at a 3.2 percent annual pace, with consumer spending advancing at a 3.3 percent rate.

In the wake of other data showing a bigger trade deficit than the government had assumed, economists expect fourth-quarter GDP growth to be lowered substantially when the government publishes updated figures later this month.

"The running tally of revisions for fourth-quarter GDP point to a downward revision to a 2.3 percent rate," said Michelle Girard, chief economist at RBS in Stamford, Connecticut.

In a separate report, the Labor Department said initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 339,000 in the week ended February 8. Economists had expected them to slip to 330,000.

A four-week moving average of claims, considered a better measure of labor market trends, rose 3,500 to 336,750, suggesting layoffs have picked up only marginally.

Bad weather was likely behind the rise in filings last week. With another winter storm hitting many parts of the country this week, the survey period for February nonfarm payrolls, there is a good chance of a third month of weak hiring.

"Weather may have an impact again in February on the payroll jobs report, although ... the government will count you as working unless you couldn't make it in to work every day of the pay period," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.

Last month, receipts at auto dealers fell 2.1 percent. It was the second consecutive month of decreases. Auto manufacturers complained last week that frigid temperatures had hurt sales. Retail sales excluding automobiles were flat.

Sales of building materials and garden equipment rose 1.4 percent, likely boosted by demand for snow removal equipment.

There were also gains in receipts at service stations and electronics and appliance stores.

(Reporting by Lucia Mutikani,; Editing by Andrea Ricci and Tim Ahmann)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (23)
dualcitizen wrote:
How will they spin this one. Whose fault: Bush, cold weather (yeah suuure that’s why they laid people off, it was cold), sequester, capitalism, global warming, what?

Feb 13, 2014 9:41am EST  --  Report as abuse
mountainrose wrote:
Been warm out West

Feb 13, 2014 10:24am EST  --  Report as abuse
SaveRMiddle wrote:
Pathetic journalism. Had the unnamed economists polled predicted lower “numbers”, the headline would be positive “Retails Sales Up Despite Cold Weather”.

How did Guesses/Opinions take total headline precedence over true comparisons using just the facts?

Economists are A Dime A Dozen. I could spend all day attempting to find two who agree.

Feb 13, 2014 10:37am EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

Recommended Newsletters

Reuters U.S. Top News
A quick-fix on the day's news published with Reuters videos and award-winning news photography and delivered at your choice of one of four times during the day.
Reuters Deals Today
The latest Reuters articles on M&A, IPOs, private equity, hedge funds and regulatory updates delivered to your inbox each day.
Reuters Technology Report
Your daily briefing on the latest tech developments from around the world from Reuters expert tech correspondents.