US retail sales up, Chinese GDP growth down

Despite earlier fears, US retail sales proved surprisingly healthy in December. Reuters reports:

Retail sales rose by a larger-than-expected 0.9 percent in December and were even stronger than anticipated when autos were stripped out, suggesting consumers were willing to open their wallets despite slowing housing markets, a Commerce Department report showed on Friday.

The seasonally adjusted December gain in retail sales, which covers the crucial holiday shopping season, was the largest since July. Analysts polled by Reuters were expecting a 0.6 percent rise.

A 1 percent jump in sales aside from autos, considered a more reliable indicator of core household spending, was well ahead of the 0.5 percent gain analysts were expecting. It was the sharpest climb since January of last year...

However, November's sales data were revised down to a 0.6 percent gain overall from a previously reported 1 percent increase, and excluded autos to a 0.7 gain from an earlier reported 1.1 percent rise...

Another report emphasized some inflation risks remain. Prices of imported goods jumped a stronger-than-expected 1.1 percent in December, with much of the increase from higher petroleum costs. When oil was excluded, import prices rose a strong 0.4 percent...

A separate Commerce Department report showed that business inventories rose a higher-than-expected 0.4 percent in November and business sales were up 0.5 percent.

So much for hopes for a Fed rate cut.

U.S. Treasury debt prices tumbled, sending yields to their highest since late October, as the data supported the view that the Federal Reserve will not cut interest rates soon. The dollar gained after the data but fell later in the day on profit taking...

"It seems that everything we heard about flat screen television sets is certainly true. The possibility of a Fed rate cut in the first quarter has melted away along with everything else on the East Coast," said Mark Vitner, a senior economist at Wachovia Securities in Charlotte, North Carolina.

A resilient US consumer must be good news for China's exporters, although the authorities there probably would not mind slower growth. From Bloomberg:

Gross domestic product expanded 10.5 percent in 2006 from a year earlier, National Development and Reform Commission head Ma Kai said today in a statement on the organization's Web site. That is down from 10.7 percent over the first three quarters...

The slowdown in investment and loans is "not stable," according to Ma. "The pace of economic growth is still fast," the planner said, adding China's government will continue to strengthen and improve macro-economic controls.