Reflecting renewed lockdowns in some states as a result of the recent spike in new coronavirus cases, the Commerce Department released a report on Wednesday showing a steep drop in U.S. retail sales in the month of November.
The Commerce Department said retail sales tumbled by 1.1 percent in November following a revised 0.1 percent dip in October.
Economists had expected retail sales to slip by 0.3 percent compared to the 0.3 percent increase originally reported for the previous month.
The bigger than expected decrease in retail sales was partly due to a sharp decline in sales by motor vehicle and parts dealers, which plunged by 1.7 percent in November after coming in unchanged in October.
Excluding the slump in auto sales, however, retail sales still fell by 0.9 percent in November after edging down by 0.1 percent in October. Ex-auto sales were expected to inch up by 0.1 percent.
Sales by clothing and accessories stores plummeted by 6.8 percent, while sales by food services and drinking places, electronics and appliance stores and gas stations also showed steep drops.
Meanwhile, the report said sales by grocery stores spiked by 1.9 percent, as consumers stocked up on food amid the renewed lockdowns.
The Commerce Department said closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, fell by 0.5 percent in November after edging down by 0.1 percent in October.
"Overall, this weakness supports our view that fourth-quarter GDP growth will be less than 4% annualized, with the weak hand-off likely to make first-quarter growth even weaker than that," said Paul Ashworth, Chief U.S. Economist at Capital Economics.
He added, "The economy will bounce back strongly in the second quarter - as vaccine deployment reaches critical mass, allowing restrictions to be eased - but until then it's going to be a long bleak winter."
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