Economic data

Dec Retail Sales were light relative to expectations, rising just .1% m/o/m headline and falling .2% ex auto’s vs up .3% for both that was expected. Sales ex auto’s and gasoline were flat vs an expected rise of .4% and also taking out volatile building materials, sales fell .2%. Nov was revised up slightly for all categories but not enough to offset the Dec weakness relative to expectations. Sales weakness was seen in the 3.9% drop in electronics sales after just a .5% rise in Nov. Department store sales fell after zero growth in Nov and online retail sales fell .4% after a 1.7% rise in Nov. Sales rose at restaurants/bars, sporting goods, clothing and furniture. Bottom line, the holiday season seems to have been just ok in terms of top line and we know it was tougher at the bottom line due to huge discounting.

The recent trend of improving Initial Jobless Claims stalled over the past week as they totaled 399k for the week ended Saturday, 24k higher than expected and up from 375k last week. It’s the highest since late Nov and brings the 4 week average to 382k from 374k. The Labor Dept said there were no unusual factors influencing the data. Continuing Claims rose by 19k but Extended Benefits fell by 48k. Bottom line, the labor market is improving but as seen today, the pace will continue to be extremely lumpy and possibly tenuous if Europe’s recession deepens.

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