The Commerce Department reported advance U.S. retail and food services sales were down 1.1% to $677.1B in December. It was the second consecutive monthly decline and the fourth negative reading in the past 6 months. Retail sales which are adjusted for seasonal shifts but not inflation were up 6.0% year over year. Total sales for the October 2022 through December 2022 period were up 6.7% year over year. Sales declines were broad-based with home furnishings (-2.5%), auto dealers (-1.2%), electronics and appliance stores (-1.1%), internet retailers (-1.1%), and clothing stores (-0.3%) all dropping in December. Department stores were especially hard-hit plummeting (-6.6%), while gasoline stations fell (-4.6%). Restaurants, the only services category declined (-0.9%) for the month, and is up (+12.1%) year over year. Sales at garden centers rose (+0.3%), grocery (+0.1%), and sporting goods, hobby, musical instrument, and bookstores were up slightly (+0.1%). Core retail sales, a measurement that excludes spending on autos, gasoline, building materials, and food services decreased by (-0.7%) in December.

The Labor Department reported that the Producer Price Index for final demand declined by an adjusted 0.5% in December, this follows increases of (+0.2%) in November, and (+0.4%) in December. The PPI index was up 6.2% for 2022, after climbing 7.3% for the 12 months ending in November. The monthly decline was driven by a (-1.6%) drop in prices for final demand goods, with energy and food leading the way. Nearly half of the decrease in the index for final demand goods is attributable to a (-13.4%) decline in prices for gasoline, as the index for final demand energy dropped (-7.9%). The indexes for diesel fuel (-27.0%) and jet fuel (-17.7%) also dropped significantly. Food prices dropped (-1.2%), led by declines in fresh and dry vegetables (-9.4%), and fresh fruits (-7.8%), while prices for chicken eggs (+24.5%) skyrocketed. The index for final demand services edged up (+0.1%), the smallest increase since April. The services increase can be traced to increases in margins for final demand trade services (+0.3%). The index for final demand transportation and warehousing services declined (-0.2%), while prices for final demand services less trade, transportation, and warehousing were unchanged. Excluding food, energy, and trade services, the so-called core PPI increased (+0.1%) in December, up 4.6% from a year ago. The core PPI increased (+0.3%) in November.

The U.S. Census Bureau reported housing starts dropped 1.4% to a seasonally adjusted annual rate of 1.382M units in December. Single-family housing starts which account for the largest share of homebuilding slid (-1.4%) to a rate of 1.382M units, down (-21.8%) from a year ago. Starts of five units or more slumped (-18.9%) to a rate of 463K units, down (-16.3%) from a year ago. New residential building permits, a proxy for future construction, fell (-1.6%) to a seasonally adjusted rate of 1.330M units. New residential building permits are running (-29.9%) below their December 2021 level. Single-family permits were down (-6.5%) from November’s revised 781K, while multifamily permits increased (+7.1%) to 555K. Leading the decline in building permits was the Midwest (-15.6%), followed by the Northeast (-2.5%), and the South (-1.7%). Only the Midwest saw an increase (+9.3%). Single-family housing completions at 1.005M, were (-8.0%) below November’s revised reading, while multifamily completions were up (+12.1%) to 385K. The number of houses approved for construction but not yet started dropped (-3.7%) to 285K units, with the backlog for single-family housing dropping (-4.9%) to 137K.