Shock drop in US retail sales draws skepticism over data

Bloomberg

So much for a merry Christmas. That is, if you trust the numbers. Commerce Department figures show US retail sales fell 1.2 percent in December from the previous month, the most since 2009, rather than the slight increase economists had forecast. Even more confusing: There was a pullback in a measure based largely on internet sales, which had been expected to be the retailing industry’s saving grace this holiday season.
Some analysts reacted not just with surprise but with an unusually large dose of skepticism. Jim O’Sullivan of High Frequency Economics Ltd said the figures were so much weaker than expected “that the data lose credibility,” while Stephen Stanley of Amherst Pierpont Securities LLC said the report “seems seriously out of whack” given mostly upbeat comments from retailers about the Christmas season.
The report was delayed about a month by the federal closure. “I’m actually wondering whether the government shutdown created issues for them in terms of data collection and quality,” said Neil Dutta, head of economics at Renaissance Macro Research LLC.
While data collection was delayed by the shutdown, “processing and data quality were monitored throughout and response rates were at or above normal levels for this release,” the Commerce Department’s Census Bureau said in report. When asked for further comment, the department referenced that section of the report.
The report showed non-store retailers — which includes online stores — fell 3.9 percent month on month, the most since November 2008. They rose just 3.1 percent on an unadjusted year-over-year basis, even as Amazon.com Inc. alone saw its net sales in North America
grow about 18 percent in the fourth quarter.
“Almost everyone seems to be dismissing the out-sized decline and writing it off as noise,” Omair Sharif, senior US economist at Societe Generale SA, wrote in a note. “It’s certainly possible that we see an upward revision when the January report is released, but it’s not clear to me that we should dismiss this report altogether, and none of what I’ve seen/heard about why today’s report is ‘wrong’ holds much water.”

POSSIBLE UNDERCOUNTING
Craig Johnson, president of retail researcher firm Customer Growth Partners LLC, said those internet shopping figures seem particularly low, suggesting some transactions were missed. “There seems to be a significant undercount problem in the internet sales,’’ Johnson said in a phone interview. “This is a real head fake.”
The official numbers tend to be volatile on a month-to-month basis, and it’s not unusual for the reported increase or decrease in sales to be outside of the range projected by analysts. They also are subject to revisions, which over the past year have ranged from zero to about 0.4 percentage point for the second reading of the monthly change.