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U.S. Retail Spending Falls

Retail spending and manufacturing activity fell in November, according to The Wall Street Journal (subscription).

The numbers: Retail sales in November decreased 0.6% from the previous month, according to the U.S. Department of Commerce. The decline marked the largest drop this year.

  • “Shoppers spent less in November on holiday categories including electronics, clothing and sporting goods. Spending on autos and furniture also fell sharply, though gasoline sales fell slightly.”
  • “Consumers, however, spent more on everyday items such as food and healthcare products. They also increased spending on restaurant meals, in a sign that demand for services remains strong despite rising prices.”
  • “Retail sales grew 6.5% in November compared with a year earlier, the slowest year-over-year growth since December 2020.”

Manufacturing slows: Manufacturing output also fell 0.6% in November, representing the first time the measure has fallen since June, according to a separate report from the Federal Reserve. 

  • “The drop in November manufacturing output included declines in consumer goods and business equipment products, contributing to a 0.2% decline in overall industrial production, the Fed said. Industrial production also measures utilities and mining output.”

The context: The drop in retail activity comes at a time when consumers are bracing for potentially challenging economic conditions. Earlier this week, the Fed raised its benchmark interest rates to a 15-year high. Inflation continues to impact costs, and a housing slump has taken some of the air out of the economy.

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