Retail sales plunged 2.7% M/M in December, while a drop of 1.2% M/M was expected. The November figure was downwardly revised from 1.8% M/M to 2.1% M/M. Part of the decline was due to a sharp drop in gasoline stations (-15.9% M/M), but weakness was broadly based as only health, personal care sales were rising (0.4% M/M). Furniture (-1.8% M/M from -0.8% M/M), building materials (-2.9% M/M from - 2.8% M/M), clothing (-2.5% M/M from 0.1% M/M) and department stores (-2.3% M/M from 1.7% M/M) were falling sharply but also food and beverages (-1.4% M/M from - 0.1% M/M) showed significant declines. Retail sales less autos showed an even bigger decline (-3.1% M/M). These figures show that the holiday shopping season was disappointing, but part of the sharp decline in December might be due to the big discounts given by retailers. Since July, retail sales were constantly falling and the rate of decline is accelerating, which indicates that recovery is not around the corner.
Import prices showed its fourth consecutive monthly decline, but dropped less than expected in December. On a monthly basis, import prices fell by 4.2% M/M while the November figure was downwardly revised to -7.0% M/M. On a yearly basis, import prices are 9.3% Y/Y lower. Most of the decline was due to the continued drop in oil prices and other commodities.
EMU: Industrial production shows sharpest plunge in 18 years
In November, industrial production dropped by 1.6% M/M in the euro zone, while a decline of 2.1% M/M was expected. The previous figure was downwardly revised from -1.2% M/M to -1.6% M/M. On a yearly basis, industrial production surprised on the downside falling by 7.7% Y/Y. Looking at the details, intermediate (-2.8% M/M from -2.4% M/M) and durable consumer goods (-2.4% M/M from -1.8% M/M) declined sharply, while non-durable consumer goods rose by 0.1% M/M (from 0.0% M/M). Although the monthly figure came out better than expected, there is no reason to become optimistic as the previous outcome was sharply downwardly revised and the yearly figure came out at its lowest level in 18 years.
In Germany, the annual GDP growth rate came out at 1.3% in 2008, while the consensus expected a figure of 1.4%, according to the FSO release. The FSO said that GDP contracted by 1.5%-2.0%, but added that it was exceptionally hard to estimate Q4 GDP. These figures raise fears that German third quarter GDP will come out extremely weak.
