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NEW YORK (Reuters) - The number of Americans applying for first-time jobless benefits rose in the latest week, reversing a recent decline and suggesting the labor market remains brittle.
Retail sales rose at the weakest pace in seven months in December as consumers pulled back late in the holiday shopping season, cutting purchases at department stores and spending less on electronic gadgets.
RETAIL SALES: "December fell short but with upward revisions to November we come in just on top of expectations, but it's still disappointing. Consumers were out there taking advantage of price discounts, taking advantage of those extended hours, but rather than ramping up consumption they were moving things around in their basket, cutting back on meals out to eat.
"Rather than resorting back to pre-recessionary spending patterns they practiced safe shopping habits. Less consumption, less spending, more of a need for something artificial to come in and support the economy, but in the long term you have healthier consumption behavior.
JOBLESS CLAIMS: "They bounced back up. What this does say is even with this large clawback we're still under 400,000 so it's clear that we've seen a new underlying decline in jobless claims."
"Draghi is concerned about the outlook for the economy and acknowledges that there is still substantial downside risk. We already know that a euro zone recession is a big risk for the first quarter, so investors are focusing more on the U.S. numbers. The weak data is causing a risk-off move and we see it in the euro, the Aussie dollar, and other currencies. The path of least resistance right now is a slightly weaker euro/dollar."
"They are disappointing numbers. The retail sales suggests that spending isn't really picking up any momentum. We are keeping up the steady pace even though the underlying figure was somewhat below trend. We are keeping up the pace and not really gathering any steam.
"The initial claims is probably going to be one of the turning points in the trend. It is a new year and seasonal adjustments can be tricky at this point but as seasonal hiring abates and moderate underlying tendencies of the labor market shine through, I can't really see initial claims continuing that down trend that we saw at the end of the year."
JOE SALUZZI, CO-HEAD OF EQUITY TRADING AT THEMIS TRADING LLC IN CHATHAM, NEW JERSEY
"The jobless claims are certainly not going in the right direction. You have people that have been encouraged that the economy is headed in the right direction so this is not what you want to see. Retail numbers aren't so great either. This was a rally that was built on the notion that things were getting better and with this kind of number, it makes you wonder. But there is always the Fed around and investors can take comfort from that."
VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
"The number of people filing their claim to qualify for unemployment benefits rose more than expected to 399,000 in the week ending January 7, putting a hiccup in the market optimism that had taken shape last month as claims' initial readings reached three year lows (falling below 370k). This weekly headline increase of 24k is the result of NSA claims rising more than seasonally predicted, although historically, this week tends to post the highest NSA reading, and this year layoffs surpassed expectations (jumping 102k to 642k, compared to a forecasted 63k rise). The jump could be explained by the eventual release of temp help that employers had held on to for a longer length of time following the holiday shopping. It would take a couple more reports of large increases to suggest acceleration in layoffs."
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
"December retail sales with a 0.1% rise overall were a little below consensus expectations for a 0.3% rise, but back month revisions offset the downside surprise overall. However the ex auto decline of 0.2% (the consensus was also +0.3%) was a significant disappointment, with neutral net revisions, producing the first decline since May 2010. Falling gasoline prices were a special factor with sales unchanged ex autos and gasoline, but this is still a disappointing outcome. With clothing one of the few areas of strength it is difficult to blame mild weather for the weakness. While there were several media reports suggesting holiday shopping was solid, yr/yr growth in chain store data did disappoint, and this data suggests the consumer, restrained by weak income growth, has lost some momentum outside autos."
Americas Economics and Markets Desk