Weak US retail sales cast doubt on pace of recovery
WORLD stocks retreated yesterday over concerns about the economic recovery stemming from weak US retail sales data, a day after a broad measure of US equities notched an almost seven-month high.
Sales increased 0.4 per cent in January, the Commerce Department said, less than the 0.7 per cent rise expected by economists polled by Reuters.
Yet core retail sales, which exclude cars, gasoline and building materials, climbed 0.7 per cent.
The S&P 500 index has risen more than 25 per cent from its recent low in early October, leading investors to question how much further the rally can run, especially in the face of a still-simmering European debt crisis.
“Stripping out the rises in gasoline and building material sales, which won’t affect real consumption, sales rose by a healthy 0.7 per cent on the month,” said Capital Economics’ Paul Dales.
So-called “core” retail sales, which go into the calculation of US GDP, rose 0.7 per cent after declining 0.4 per cent in December. Core sales strip out cars, gasoline and building materials.
Yet investors on Wall Street took a dim view of the report and the S&P 500 index retreated from a near seven-month high. Prices for US Treasury debt rose and the dollar rose against a basket of currencies.
After recent bullish data, some analysts had expected the retail stats to point to a stronger start to the year.