Wednesday, December 26, 2012

US holiday retail sales weakest since 2008

U.S. holiday retail sales in the U.S. this year were the weakest since 2008, when the nation was in a deep recession, the AP reported on Wednesday.

Holiday sales are a crucial indicator of the economy's strength, the AP noted. The last two months of the year account for up to 40 percent of annual sales for many retailers.

Consumer spending constitutes 70 percent of overall economic activity, the AP noted, hence the two-month holiday shopping season is seen a critical time of the year for retailers, manufacturers, wholesalers and companies at every other point of the supply chain.

Retailers will likely offer steeper discounts in the coming days to clear some of their unsold inventory, the AP pointed out, which may help to soften some of the blow. But according to Michael McNamara, vice president for research and analysis at MasterCard Advisors SpendingPulse, this year's weak holiday sales could have repercussions for 2013.

Retailers will make fewer orders to restock their inventory, he said, and discounts will hurt their profitability. Wholesalers, in turn, will purchase fewer goods, and orders to manufacturers for consumer goods will likely decline in the coming months.

Related Post from Dec. 4: U.S. Manufacturing sinks to 3-year low