US retail fall indicates slow recovery

Sales at United States retailers unexpectedly fell in December following a bigger gain than previously estimated the month before, highlighting the risk that the largest part of the economy will be slow to recover.

The 0.3 per cent decrease came after a 1.8 per cent jump the month before, Commerce Department figures showed in Washington. Other reports showed inventories rose more than forecast in November and jobless claims climbed last week.

A jobless rate projected to average 10 per cent this year, tight credit and depressed home values indicate halting improvement in consumer spending, which accounts for 70 per cent of the economy.

The inventory data signal growth was boosted by manufacturing last quarter, an improvement that will require stronger demand in order to be sustained in coming months.

"We are going to have positive but moderate growth" in consumer spending in the first half of this year, said Zach Pandl, an economist at Nomura Securities International Inc in New York.

"We are gradually emerging from recession."

Some of the decreases in sales last month followed gains in November, indicating problems with adjusting the data for seasonal issues may have played a role in the see-saw pattern.

The mid-December blizzard in parts of the eastern US may also have contributed to the decrease.

- BLOOMBERG