Core Retail Sales Beat Despite Electronics And Appliance Sales Drop; Empire Fed Misses Big

Tyler Durden's picture

Good news, bad news on the economic front this morning. The good news: December advance retail sales rising 0.5% on expectations of a 0.2% increase, up from a 0.4% revised November print. Excluding the volatile auto sales, the number was up 0.3% on expectations of a 0.2% increase, and up from a 0.1% decline. Excluding autos and gas, the print was 0.6%, on expectations of a 0.4% increase. The biggest increase in December retail sales by category was in food services and drinking places which rose 1.2% in December, the same as November. Strong numbers were posted at clothing and accesory stores (+1.0%) and health and personal care (+1.4%) - all very low margin sales. Yet where the report was undisputedly weak, and where many were hoping for a boost but did not get it, was in the higher margin electronics and appliance stores, which dropped -0.6% in December, down big from the 2.3% increase in November, and further weakness for those hoping that December saw a surge in spending over gadgets. In other words, more bad news for the makers of iGizmos.

As for the bad news: it was all in the Empires State Manfuacturing Index which missed expectations big, and in fact posted a decline from the abysmal November miss, revised to -7.30, and now down to -7.78, the sixth negative print in a row, on expectations of an unchanged print. This was the 5th miss in the series in the last 6 reports, the worst miss in 4 months, and the lowest number in 4 months. Alas there was no hurricane in December to blame this major miss on.  Oh yes, we remember, "the fiscal cliff."

Empire Fed:

From the report:

The general business conditions index was negative for a sixth consecutive month and, at -7.8, was little changed from its recent readings. The new orders index fell four points to -7.2, and the shipments index declined a full fi fteen points to -3.1. Price increases picked up, with the prices paid index rising six points to 22.6 and the prices received index rising ten points to 10.8, the highest readings for both of these indexes in several months. Labor market conditions remained weak, with the indexes for both the number of employees and the average workweek remaining below zero for a fourth  month in a row. The level of optimism about the six-month outlook rose some what from December, but remained low compared with levels in early 2012. Significantly, the capital expenditures index fell to 4.3, its lowest reading since 2009.

Other categories not doing very hot in January were New Orders, plunging to -7.18 from -3.44, Shipments down to -3.08 from 11.93, and Unfilled Orders -7.53 from -6.45. There was a modest pick up in the Number of Employees rising to -4.30 from -9.68, Prices Paid and Prices Received both rose, offsetting margin gains, and Inventories, as always, posted an increas to -8.60 from -11.83. When in doubt - stock up on inventory.

It gets worse:

In a series of supplementary questions, manufacturers were asked about anticipated changes in their workforce and the factors underlying these  changes. Twenty-seven percent of survey respondents indicated that they expected the total number of workers at their firm to increase over the next twelve months, while 19 percent predicted declines in their workforce—a considerably less positive balance than in last January’s survey. Among firms planning to boost employment, high expected sales growth was widely reported to be the most important impetus to hiring; conversely, low expected sales growth was most widely cited as the primary restraint on hiring. Sales growth was also seen as the primary factor behind employment increases and decreases in the 2012 survey.


Prices increases steepened, with the indexes for both prices paid and prices received reaching their highest levels in several months. The prices paid index rose six points to 22.6; twenty-five percent of respondents reported that input prices had increased and just two percent reported that input prices had dropped. The prices received index rose ten points to 10.8. Employment indexes suggested that labor market conditions remained weak. The index for number of employees was  -4.3, and the average workweek index was -5.4. Although these readings were somewhat higher than in December, both indexes were negative for a fourth consecutive month.

And so on. Expect much more endless easing by the Fed following this confirmation that the US economy is going nowhere fast.

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GetZeeGold's picture



That core is getting pretty damn small.

ihedgemyhedges's picture

Drinking establishments sales way up????  Wow, uhhhh, I never woulda thought.........

"Honey, did you buy all the stuff for the kids I told you to?  And did you get the tree yet?  And did the CPA tell you how much our taxes are going up? And don't forget, my mom is coming in to town tomorrow for two weeks.  You need to pick her up at the airport."

yogibear's picture

What a combo, drinking, guns and ammo. Going to have a real hoot!

NemoDeNovo's picture

Thank Goodness "They" started the whole Gun BS before Christmas so the amount of Gun sales could "Prop Up" the Holiday retail sales numbes.  Obama loves you....</sarc>

achmachat's picture

of course retail was good... there's already more than 5 million American Silver Eagles sold this month!

GetZeeGold's picture



Pretty much down to just getting the essentials.

Shizzmoney's picture

Cliffs: Consumers spend money (that they don't have) for crap (they don't need) in December to (maybe) pay off by July 2015.

buzzsaw99's picture

A good percentage of the people I know who constantly buy gobs of stuff can in no wise afford it.

GetZeeGold's picture



Just swipe the's free.

economics9698's picture

My friends use the old stop paying the mortgage, find a couple of robo sighed papers in the mortgage documents, file a court action, run up the credit cards, and vacation in Vancouver financial planning strategy.  Seems to be working out well for them.

SheepDog-One's picture

Nothin will stop americans from gorging on retail foods...well unless they cut off EBT cards. 

economics9698's picture

My wife is in the restaurant business, never been better.  

economics9698's picture

Education, it's a bubble economy.

GetZeeGold's picture



Nice those union dues and hope the retirement ponzi doesn't collapse until after you're long gone.

retiringteach's picture

agree-i lve in boca raton, florida-lines out the door almost everywhere

azzhatter's picture

Boca is very representative of 90% of America

GetZeeGold's picture



Old fossils lining up for the early bird specials.


A pretty solid industry until we have to take on entitlements.

overmedicatedundersexed's picture

prepared cheap food is cheaper than buying at super market..up scale food places ..ruth chris look like every one is now vegitarian..but maybe that is just fly over country and the big important cities are swinging. not on your life

Cursive's picture

J6P can finance and car purchase and later default on it, but J6P doesn't have enough discretionary income for (moar) electronic trinkets.  Smartphones, phablets and tablets have saturated an already over-bought HDTV and PC home electronics landscape.

SheepDog-One's picture find....consumer Nirvana....must buy...

Silverhog's picture

Looks like Eat, Drink and be Merry until WTF hits.

More_sellers_than_buyers's picture

There were no sales in December.  I went Christmas shopping at the mall, empty everytime I went. Very Empty.  Who is the research outfit that estimates sales by sattelite photos of parking lots? I bet they have some interesting data!

buzzsaw99's picture

Some of that is people who research &/or order stuff online. People have become much more efficient shoppers. When I go in to buy something I know exactly what I want and it takes just a few minutes. The days of milling around in the crowds are over for many.

Freddie's picture

The only people shopping were people at gun stores or EBT shoppers.  The media lies so much. Christmas was terrible.  I saw it with the junk boxes at the curb after Christmas.  I spent nothing.   Hope & Change.

buzzsaw99's picture

I know that the economy sucks because I hit the pawn shops recently. I bought a $1200 set of golf clubs for a little bit of nothing. I can guess by what I paid that the guy pawned them for $50. How desperate is that? I'm guessing he was raising xmas $ because I would go without food before I let these go for $50.

mr1963's picture

Stolen off a golf cart in September...

buzzsaw99's picture

Possibly. I don't live in Joisey though.

edit: I guess the hundred other sets I saw were stolen too?

PUD's picture

Fed's Kocherlakota says policy not easy enough  B-52 DROPS OF C NOTES!! PRINTING A GLORIOUS FUTURE THROUGH MMT!!

firstdivision's picture

Sales down, outlook not so rosey.  Don't worry, there's a cream for that.

BulletinFed's Kocherlakota: U.S. monetary policy isn't loose enough


The Empire Index is irrelevant as the Richmond Fed will make sure to trump it 10 fold, reality be damned.

SheepDog-One's picture

'Not loose enough'...that's like Bernank looking at his 500 pound wife and saying 'Yer just not fat enough!'

How the fuck are they going to make so-called 'monetary policy' MORE looserer...actualy DO helicopter drops of C-notes directly onto Wall St roof tops?

Stormtower's picture

And for a further drag on the economy.........the IRSis now threatening employers.


fonzannoon's picture

"The employer mandate requires employers with 50 or more full-time employees to offer “affordable” health insurance coverage to those employees, with “affordable” defined as costing an employee no more than 9.5 percent of his total household income"

I am self employed so I am on my wife's health coverage. The coverage is about 18% of her income.

Save us Obamacare. I believe in you.


venturen's picture

They should only count things included in Inflation so no food or energy.

madcows's picture

My question is whether the numbers are adjusted for inflation, and if they are, what inflation number are they using, b/c we all know the BLS numbers are bogus.

Sudden Debt's picture

Despite Electronics And Appliance Sales

yeah... iPop didn't contribute this year as it should!

youngman's picture

I wonder how much the EBT cards added to the restaurant and bar numbers....we have 47 million on them...that is a big retail block if they buy booze and food....

Sudden Debt's picture

1$ on food

5$ on booze



Fourth Horseman of the Apocalypse's picture

Five weekends in the month of December helped a great deal.  

adr's picture

Funny, I used to remember the media pulling all that bullshit a few years ago to explain a retail data miss.

gatorengineer's picture

The point that is being missed is that real inflation food, and energy is running at 7 to 10 percent.  So when you factor that in Sales are actually flat to declining.

Sudden Debt's picture

still using the PRE 2008 calculator he?

yogibear's picture

We are still shooting for over 50 million on food stamps. 

Inthemix96's picture

It wouldnt have owt to do with the fact that nearly everybody I speak to is skint would it?

With no available cheap credit to be had?  Or the fact that gas and electric last month rose by a combined 16.1%?  Or food inflation is gripping people by the balls?

Could be something else mind?

CoolBeans's picture

They'll blame this one on the beginnings of the great flu epidemic....same with the next reports.


JethroTull's picture

Non existent elecrtronics buyers == bitchesz

Does Apple know something we don't? Production inputs down?


adr's picture

Retail sales is the check a vendor gets for the quantity of goods sold for the holiday season. Not this guesstimated, seasonaly adjusted, point percentage bullshit.

Is the check a company got larger or smaller than last year? If retailers ordered less merchandise than last year, they did by the way, you can't sell more.

Even with the limited inventory much of it still had to go on clearance at 50%+ off to move. GREAT FOR MARGINS.

Unless our entire economy follows the Amazon model, which it might, where you don't need to make a profit on anything as long as you just sell the shit. You'll make profit on the flow. Code word for granting yourself more stock options.

I don't know if I should really care that Amazon is a giant back alley merchant from Hong Kong. I mean when you buy a fake Gucci purse in a back alley in Hong Kong, you know it is a fake. The problem I have is that Amazon does the same thing, but claims the products are real, just selling at incredibly low prices. Some of the stuff isn't actually fake per se, just backdoored directly from the chinese factory that is making the real product. Bypasing the traditional sales route.

I hope everyone knows that Chinese factories produce massive overruns of virtually every order, helping the goalseeked Chinese GDP. Say you order 30k units, the factory will produce 50k and ship your 30k. This leaves them with an extra 20k to sell. Your price may be $3 per unit, which will become a $20 retail product after you make your money and the retailer takes his 60% base margin.

Bezos has plugged Amazon into the black market, purchasing the Chinese overrun inventory. They will buy the inventory at $4 a unit, giving the Chinese factory a huge incentive to do business with them. Amazon can then put the product on their site for $10, knowing the wholesale price for mass retail is probably around $9. Amazon kills the brick and mortar retailer on price and can make a huge profit.

The big issue is the complete disruption of the traditional sales channel and the total disregard for IP. It is virtually impossible to beat Amazon if you do produce your product in China. Even though the product is technically counterfeit, it is actually your product produced alongside your product. The product Amazon produces in court will match your product exactly, and you will be forced to admit that it is in fact your product.

Where my company has Amazon is that we do not produce product in China, but there are Chinese fakes. We had US customs intercept a shipment in the port of Seattle from Guang Dong containing counterfeit product marked for delivery to Amazon. Amazon claims the product was sold by a marketplace vendor and they aren't responsible for checking the authenticity of product sold by those vendors. Of course we have screen grabs of the Amazon website showing the counterfeit product marked as sold by Amazon direct for $8, when the average retail price of our product is $20.

Why did I write all of this? If Amazon did this to my company, we probably aren't alone. Amazon cliams they are just a distributor and aren't responsible if they ship stolen or counterfeit goods. Using a grey theory argument. I wonder if the guy selling fake Rolex watches in the NYC alley can use the same argument when the cops bust him, "I didn't know they were fake, I'm just a distibutor."