Tag Archives: Economy

Ford halting Venezuela production until April, executive says

Ford logo

SAO PAULO (Reuters) – Ford Motor Co <F.N> halted auto production in Venezuela last week and will not resume it until April, a company executive said on Tuesday, in another blow to the crisis-wracked country’s manufacturing sector.

“It is a measure to adjust production to demand in the country,” Lyle Watters, Ford’s president for South America, told reporters at an event in São Paulo, adding that the plant affected by the shutdown employs 2,000 workers.

Watters said the production freeze would not affect Ford’s consolidated results as operations in Venezuela are reported separately. Beginning in the first quarter of this year, Venezuela became the only wholly owned Ford unit with operating results that are excluded from the full company’s income statement.

In January 2015, Ford took a charge related to its Venezuelan operations that cut fourth-quarter net profit by $700 million. Ford is the only automaker still mass producing cars in Venezuela, even on a limited scale.

Vehicle production in recession-hit Venezuela is less than 8 cars a day, according to figures provided by the national automakers organization Cavenez. Ford produced 2,253 units out of a paltry national total of 2,768 in the year through November.

It takes less than two days for Ford at one of its larger U.S. plants to make as many vehicles as the company has made in Venezuela so far in 2016.

Ford in 2014 halted production for about a month due to a lack of foreign currency to import parts for assembly.

In mid-2015, Ford’s major U.S. rival, General Motors Co <GM.N>, stopped making vehicles in Venezuela altogether. GM had one plant in Venezuela.

(Reporting by Alberto Alerigi and additional reporting by Andrew Cawthorne in Caracas, writing by Ana Mano; Editing by Tom Brown and Alistair Bell)

U.S. home sales near 10-year high as mortgage rates rise

Homes for sale in Oregon

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. home resales unexpectedly rose in November, reaching their highest level in nearly 10 years, likely as buyers rushed into the market to lock in mortgage rates in anticipation of further increases in borrowing costs.

The third straight monthly increase in existing home sales, reported by the National Association of Realtors on Wednesday, suggested housing would contribute to economic growth in the fourth quarter after being a drag in the previous two quarters.

“The strength in home sales, if it holds, will provide a big boost for consumer spending in 2017 and makes us more confident about our outlook for stronger growth next year,” said Chris Rupkey, chief economist at MUFG Union Bank in New York.

Existing home sales increased 0.7 percent to an annual rate of 5.61 million units last month, the highest sales pace since February 2007. October’s sales pace was revised down to 5.57 million units from the previously reported 5.60 million units.

Economists had forecast sales slipping 1.0 percent toa 5.50 million-unit pace in November. Sales were up 15.4 percent from a year ago. They rose in the Northeast and South, but fell in the Midwest and West last month. Mortgage rates have surged in the wake of Donald Trump’s victory in the Nov. 8 presidential election. Trump’s proposal to increase infrastructure spending and slash taxes is seen as inflationary.

Since the election, the interest rate on a fixed 30-year mortgage has increased about 60 basis points to an average 4.16 percent, the highest level since October 2014, according to data from mortgage finance firm Freddie Mac.

Mortgage rates are expected to rise further after the Federal Reserve raised its benchmark overnight interest rate last week by 25 basis points to a range of 0.50 percent to 0.75 percent. The U.S. central bank forecast three rate hikes next year.

The prospect of higher mortgage rates could be pushing undecided buyers into the market. But the combination of higher borrowing costs and rising house prices, which are outstripping wage growth, could hurt home sales.

House prices have been marching ahead amid a chronic shortage of properties for sale. The median house price was $234,900 last month, a 6.8 percent increase from a year ago.

Economists, however, expect higher mortgage rates to have a minimal impact on home sales as the labor market nears full employment and the economy strengthens.

‘AT A CROSSROADS’

“This is a housing market at a crossroads,” said Stephen Phillips, president of Berkshire Hathaway Home Services in California.

“The higher mortgage rates we’ve seen since the election will likely slow activity and price increases, but faster income growth might more than offset that trend as we look toward next year’s spring market.”

A separate report from the Mortgage Bankers Association on Wednesday showed applications for loans to buy a home increased 3 percent last week from the previous week.

The dollar <.DXY> was trading lower against a basket of currencies after the data, while prices for U.S. government bonds rose. U.S. stocks were slightly weaker, with the Dow Jones industrial average <.DJI> still hovering near the 20,000 mark.

The PHLX housing index <.HGX> rose 0.30 percent as shares in the nation’s largest homebuilder, D.R. Horton Inc <DHI.N>, gained 0.32 percent.

Last month’s increase in home resales means more brokers’ commissions, which are included in the residential component of the gross domestic product report.

The Atlanta Fed is forecasting GDP rising at a 2.6 percent annual rate in the fourth quarter. The economy grew at a 3.2 percent pace in the July-September period.

Existing home sales remain constrained by a persistent shortage of properties available for sale. Last month, the number of unsold homes on the market fell 8.0 percent from October to 1.85 million units.

Supply was down 9.3 percent from a year ago and has now declined for 18 straight months on a year-on-year basis. At November’s sales pace, it would take 4.0 months to clear the stock of houses on the market, down from 4.3 months inOctober. A six-month supply is viewed as a healthy balance between supply and demand.

Housing inventory could remain an obstacle, with a report last week showing a plunge in home construction in November. With supply tightening, house prices notched their 57th consecutive month of year-on-year gains in November.

Rising house prices are increasing equity for homeowners and encouraging some to put their homes on the market, but making it more difficult for first-time buyers to purchase homes.

First-time buyers accounted for 32 percent of transactions last month, well below the 40 percent share that economists and realtors say is needed for a robust housing market.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Dollar index holds near 14-year high

US Dollar

By Richard Leong

NEW YORK (Reuters) – The dollar was little changed on Monday versus a basket of currencies, holding near a 14-year peak buttressed by expectations of fiscal stimulus from U.S. President-elect Donald Trump and a faster pace of interest rate increases.

The greenback scaled back from its highest since early February against the yen as data that showed Japan’s export performance improved strongly in November spurred a burst of profit-taking.

The dollar, which has rallied since Trump’s win on Nov. 8, will likely trade in a tight range in coming days on dwindling liquidity, analysts said.

Profit-taking and lower U.S. Treasury yields <US2YT=RR> <US10YT=RR> would keep the greenback from rising further, they said.

“The dollar would be reasonably sideways between now and the end of the year,” said Jason Leinwand, founder and chief executive officer of FirstLine FX in Randolph, New Jersey.

The dollar index <.DXY> which measures the greenback versus the euro, yen and four other currencies, was up 0.03 percent at 102.98. On Dec. 15, it reached 103.56 which was its highest since Dec 2002.

Traders await a speech from Fed Chair Janet Yellen at 1:30 p.m. (1830 GMT) for possible hints that last week’s Fed meeting, where policy-makers signaled the central bank could increase interest rates three times in 2017, was interpreted by markets as more hawkish than had been intended. [FED/DIARY]

U.S. interest rates futures implied traders saw about a 46 percent chance the Fed would hike at least three times in 2017 with the next increase likely in June, according to CME Group’s FedWatch program. <FFM7> <FFZ7>

Prospects of more rate hikes supported bullish bets on the dollar. Data released on Friday showed dollar net long positions were little changed on Dec. 13. Net shorts on the yen rose to their largest since early December last year. [IMM/FX]

The Bank of Japan started a two-day policy meeting on Monday, at which it is expected to keep its 10-year government bond yield target <JP10YT=RR> as the weaker yen helps Japan’s economic prospects, a Reuters poll showed on Friday.

“The speed of the yen’s weakening was likely much faster than the BOJ anticipated,” said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank in Tokyo.

The dollar was down almost 0.9 percent at 117.13 yen <JPY=> after climbing to 118.66 yen on Dec. 15 which was the highest since Feb. 2, according to Reuters data showed.

(In Dec 19 item, corrects spelling of last name to Leinwand, not Weinwand, in 5th paragraph)

(Additional reporting by Jemima Kelly in London and Tokyo markets team; Editing by Chizu Nomiyama)

Dow closing in on 20,000; Nasdaq hits record high

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S.,

By Tanya Agrawal

(Reuters) – The Dow and the Nasdaq hit record highs on Tuesday, with the blue-chip index just 13 points shy of the 20,000 mark, a level it has never scaled.

Goldman Sachs, which was up about 1 percent, gave the biggest boost to the Dow.

U.S. stocks have been on a tear since the Nov. 8 presidential election, with the Dow up 9 percent and S&P more than 6 percent on bets that President-elect Donald Trump’s plans for deregulation and infrastructure spending will boost the economy.

“It’s just the momentum since the election,” said Jeff Zipper, managing director for investments at Private Client Reserve at U.S. Bank in Palm Beach, Florida.

“The market is focused on the Trump agenda, which is tax cuts, infrastructure spending and deregulation. There’s not a lot of selling going on.”

However, trading volumes were muted as the last full trading week before the holiday season gets underway where movements may be pronounced.

There are also concerns that the post-election rally may have gone too far too soon.

“I think we’re a little bit concerned that market trends may be extended a little bit and market prices need to convert to fair value, and it’s not unusual to see a pullback after such a move,” said Zipper.

The S&P 500 is trading at 17.9 times forward 12-month earnings, above the 10-year median of 14.7 times, according to StarMine data.

At 11:08 a.m. ET (1608 GMT) the Dow Jones industrial average was up 83.92 points, or 0.42 percent, at 19,966.98.

The S&P 500 was up 8.69 points, or 0.38 percent, at 2,271.22. The index came within 5 points of its record high.

The Nasdaq Composite was up 25.67 points, or 0.47 percent, at 5,483.11.

Eight of the 11 major S&amp;P sectors were higher, with the telecommunications index’s 0.99 percent rise leading the gainers.

The financial index was also up 0.93 percent. The index has risen 18.5 percent since the election, buoyed by Trump’s deregulation plans and the prospect of higher interest rates.

Brent oil prices rose by $1 to a one-week high on forecasts of a steep draw in U.S. crude stocks that could indicate global oversupply is starting to shrink.

The dollar climbed to a 14-year high after Federal Reserve Chair Janet Yellen’s comments about the labor market reinforced the notion of a faster pace of U.S. interest rate hikes next year than had been expected.

General Mills  fell 3.3 percent to $61.00 after the Cheerios cereal-maker’s quarterly results missed expectations.

Nvidia &lt;NVDA.O&gt; was up 3.9 percent at $105.59 after brokerages Goldman Sachs and Mizuho raised their price targets on the chipmaker’s stock. The stock was among the big Nasdaq boosters.

Advancing issues outnumbered decliners on the NYSE by 1,914 to 901. On the Nasdaq, 1,819 issues rose and 858 fell.

The S&amp;P 500 index showed 29 new 52-week highs and no new lows, while the Nasdaq recorded 164 new highs and 20 new lows.

(Reporting by Tanya Agrawal in Bengaluru; Editing by Anil D’Silva and Saumyadeb Chakrabarty)

‘Santa Claus isn’t coming,’ recession-hit Venezuelans tell kids

A child walks in a toy store in Caracas, Venezuela, December 1, 2016.

By Andreina Aponte

CARACAS (Reuters) – As a harrowing economic crisis makes food scarce for millions of Venezuelans, many families cannot buy their children Christmas presents, decorate their home, or even host a holiday dinner.

The oil-rich country is suffering the third year of a recession that has sparked product shortages and galloping inflation. With a recent currency depreciation pumping up prices even higher, some parents are simply canceling Christmas.

“Last year I bought everything for my daughter,” said Dileida Palacios, a 40-year-old hairdresser dressed in black to mourn her son killed in crime-rife Venezuela a few weeks ago.

“This year I had to tell her everything is tough and Santa Claus isn’t coming.”

Like Palacios, about 38.5 percent of Venezuelans think this Christmas will be worse than last year’s, and 35 percent think it will be the worst ever, according to a poll by consultancy Ecoanalitica and Catholic University Andres Bello.

Several days of unrest over a national cash shortage have added to the grim national mood.

Once merrily decorated during the holidays, Caracas looks shabby. Many stores are empty, closed or selling cruelly expensive toys, Christmas trees, and holiday treats like “hallacas,” a cornmeal dish wrapped in plantain leaves.

Eight-year old Helen Ramirez, who lives in Caracas’ sprawling Petare slum, asked Santa for food for her family and pink roller skates from the Disney show “I’m Luna.”

But those skates are far out of reach for Ramirez’s family at about 400,000 bolivars, roughly $100 at the black market rate and about 14 times the monthly minimum wage.

“This year we didn’t decorate the house or anything,” said Ramirez’s grandmother, Nelys Benavides, during a charity-organized present giveaway in Petare. “We have nothing.”

President Nicolas Maduro’s leftist government accuses businessmen and rival politicians of seeking to stoke anger and ruin Christmas.

State media has feted the arrival of 200 containers of toys and food in Venezuela’s otherwise largely deserted ports, and Maduro lit a cross on Caracas’ Avila mountain in November to usher in early holidays.

His government confiscated 3.8 million toys from importer Kreisel, accusing the company of hoarding and price gouging.

Two Kreisel executives have been jailed, and Socialist Party committees have been distributing the toys to children.

“That’s what you call a reinforcement for Father Christmas, right?” the president laughed, stroking his mustache during a recent speech on state TV. “Saint Nicolas without a beard; Saint Nicolas with a mustache!”

(Additional reporting by Eyanir Chinea; Editing by Alexandra Ulmer and Lisa Von Ahn)

Pockets of protests, looting in Venezuela as cash dries up

Venezuelan National Guard members control the crowd as people queue to deposit their 100 bolivar notes, near Venezuela's Central Bank in Caracas, Venezuela

By Anggy Polanco and Maria Ramirez

EL PINAL/CIUDAD GUAYANA, Venezuela (Reuters) – Small protests and looting broke out in some Venezuelan provinces on Friday due to lack of cash after the socialist government suddenly decreed this week that its largest banknote would be pulled from circulation in the midst of a punishing economic crisis.

President Nicolas Maduro on Sunday gave Venezuelans a few days to ditch the 100-bolivar bills, arguing the measure was needed to combat mafias on the Colombia border despite warnings from some economists that it risked sparking chaos.

Venezuela’s opposition says this latest measure is further evidence that Maduro is destroying the economy and must be removed. Authorities have blocked a vote against the leftist leader, however, leaving social unrest as a possible wild card in the volatile country.

With new bills, originally due on Thursday, still nowhere to be seen, many Venezuelans on Friday were unable to fill their car tank to get to work, buy breakfast, or get gifts ahead of Christmas.

Many cash machines were broken or empty, shops struggled to be paid, and tips vanished.

“We feel this is a mockery,” said bus driver Richard Montilva as he and some 400 others blocked a street outside a bank in the town of El Pinal in Tachira state near Colombia.

Maduro held up the new bills during a televised broadcast on Thursday night and said they would come into circulation soon. But there was increasing nervousness on the streets that the notes were not ready.

The circulation of the new notes “is a mystery to us too,” said a source at the central bank, who requested anonymity because he was not authorized to speak to the media.

Outside the central bank in Caracas on Friday, thousands of Venezuelans queued up to swap their 100 bolivar bills before a final Tuesday deadline under the watch of National Guard soldiers. One orange and avocado vendor offered to buy them up for 80 bolivars.

Maduro’s shock decision is stoking anger among weary Venezuelans who have for years already stood in long lines for food and medicine amid product shortages and triple-digit inflation.

Six businesses in the isolated Bolivar state were looted on Friday after stores refused to accept the soon-to-be defunct bills, said the mayor of El Callao, Coromoto Lugo, who belongs to the opposition.

Maduro blames the crisis on an “economic war” waged against his government to weaken the bolivar currency and unseat him. Critics scoff at that explanation, pointing instead to state controls and excessive money printing.

“I want a change in government. I don’t care about changing the bills; they’re not worth anything anyway,” said Isabel Gonzalez, 62, standing in line at the central bank on Friday.

She said she had just enough cash to get a bus home.

(Additional reporting by Girish Gupta and Alexandra Ulmer in Caracas; Editing by Mary Milliken)

U.S. banks must pay up to $2 billion more per year to shield Wall Street: Fed

A Wall Street sign is pictured outside the New York Stock Exchange in New York,

WASHINGTON (Reuters) – The largest U.S. banks will have to pay as much as $2 billion more a year to insure against a future market collapse, the U.S. Federal Reserve said on Thursday, as it outlined a new rule designed to further protect the financial system.

The rule demands Wall Street holds more debt that could be converted to shareholder equity if a bank is pushed to bankruptcy. Investor-owned stock is the main buffer against a bank failure.

Half of the eight largest U.S. banks would need to issue roughly $50 billion in fresh debt to satisfy the new standard, known as Total Loss Absorbing Capacity (TLAC), according to Fed estimates.

Taken together, the eight banks’ overall annual funding costs are set to increase by between $680 million and $2 billion, the Fed has said.

Fed officials declined to identify the four banks that lack sufficient debt. Wells Fargo Co said in November it envisioned issuing at least an additional $29 billion in debt to satisfy the rule.

Large banks were already making significant strides to satisfy the new rule, Fed officials said.

The final rule issued on Thursday largely upholds a draft issued early this year, but with a few concessions to the industry.

Much existing debt will be counted towards satisfying the new rule, the Fed said, a process known as ‘grandfathering’.

“This grandfathering should significantly reduce the burden of complying with the requirements,” the Fed said in a statement.

Besides Wells Fargo, the banks expected to satisfy the new rule are JPMorgan Chase &amp; Co, Bank of America Corp, Citigroup Inc, State Street Corp, Bank of New York Mellon Corp, Morgan Stanley and Goldman Sachs Group Inc.

Some of the largest subsidiaries of foreign banks must also satisfy TLAC.

(Reporting By Patrick Rucker in Washington; Additional reporting by Dan Freed and David Henry in New York; Editing by Bill Rigby)

U.S. short-term bond yields, dollar gain on Fed rate hike

A trader works on the floor of the New York Stock Exchange (NYSE) as a television screen displays coverage of U.S. Federal Reserve Chairman Janet Yellen shortly after the announcement that the U.S. Federal Reserve will hike interest rates, in New York, U.S.,

By Caroline Valetkevitch

NEW YORK (Reuters) – Yields on shorter-dated Treasuries hit their highest in more than five years on Wednesday while the dollar rallied after the U.S. Federal Reserve raised interest rates as expected and signaled a faster pace of hikes in 2017.

U.S. stocks fell in choppy action, but were off their lows, following the statement from the Fed, which raised the target federal funds rate 25 basis points to between 0.50 percent and 0.75 percent.

Central bank policymakers also shifted their outlook to one of slightly faster growth, with President-elect Donald Trump planning a simultaneous round of tax cuts and increased spending on infrastructure.

“It was largely as expected, but it’s pretty clear the market is taking it as a bit more aggressive or hawkish than it had thought,” said Ed Keon, portfolio manager and managing director at QMA, the multi-asset manager wholly-owned by Prudential Financial in Newark.

Yields on two-year Treasury notes rose to their highest since August 2009, while three-year yields hit their highest since May 2010 and five-year yields rose to their highest since May 2011.

U.S. two-year notes fell 4/32 in price to yield 1.247 percent.

The dollar index, which measures the greenback against a basket of six major currencies, was last up 1 percent at 102.11. The index had been trading lower while bond yields were also mostly lower before the Fed statement.

In the U.S. stock market, the Dow Jones industrial average fell 41.96 points, or 0.21 percent, to 19,869.25, the S&amp;P 500 lost 7.7 points, or 0.33895 percent, to 2,264.02 and the Nasdaq Composite dropped 0.33 points, or 0.01 percent, to 5,463.49.

MSCI’s all-country world stock index was down 1.1 percent, adding to earlier losses. The pan-European STOXX 600 share index ended down 0.5 percent.

Gold turned lower and tapped the lowest in more than 10 months following the Fed statement, while oil prices fell as the dollar gained.

Spot gold was down 0.3 percent at $1,154.62 an ounce.

Brent crude futures settled at $53.90 per barrel, down $1.82, or 3.27 percent. U.S. crude ended the session down $1.94, or 3.66 percent at $51.04 per barrel.

(Editing by Robin Pomeroy and Nick Zieminski)

Wall Street treads water as investors await Fed decision

A trader wears a hat referencing the proximity of Dow Jones Industrial Average to 20,000 as he works on floor of the New York Stock Exchange (NYSE) shortly before the close of trading in New York, U.S.

By Tanya Agrawal

(Reuters) – Wall Street opened little changed on Wednesday, a day after all three major indexes hit record highs, as investors awaited the outcome of the U.S. Federal Reserve’s meeting.

The Fed is widely tipped to lift rates 25 basis points to 0.50-0.75 percent. The announcement is due at 2 p.m. ET (1900 GMT), followed by Chair Janet Yellen’s news conference 30 minutes later.

Market participants will be paying close attention to Yellen’s tone and new forecasts, seeking clues on policymakers’ thinking on how President-elect Donald Trump’s policies will impact growth and inflation.

However, concerns over a strengthening dollar linger with the dollar index, which measures the greenback against a basket of six major currencies, hitting 14-year peaks last month.

“Markets are acting like a zombie today ahead of the Fed decision,” said Naeem Aslam, chief market analyst at Think Markets.

“It is not that they are not expecting a rate hike from the Fed, it is the element of the unknown which Yellen would deliver in her statement.”

At 9:37 a.m. ET the Dow Jones industrial average was up 0.26 points, or 0 percent, at 19,911.47, the S&P 500 was up 0.47 points, or 0.020689 percent, at 2,272.19 and the Nasdaq Composite was up 7.65 points, or 0.14 percent, at 5,471.48.

Six of the 11 major S&P sectors were lower, with the financial index’s 0.91 percent fall leading the decliners.

Wells Fargo fell 2.5 percent to $54.43 after the bank’s “living will” failed U.S. regulators’ assessment for a second time this year.

Oil prices fell about 2 percent as glut worries resurfaced after a reported rise in U.S. crude inventories.

U.S. stocks hit new all-time highs on Tuesday and the Dow Jones industrial average ended fewer than 100 points away from the 20,000 mark as a post-election rally showed no signs of fatigue.

The Dow has climbed about 9 percent since the Nov. 8 election, with gains fueled by expectations that Trump will reduce taxes and regulation and stimulate the economy.

“I don’t think the Dow is an indicator of anything because it’s such a small sample and the way in which the index is constructed,” said Patrick Kaser, portfolio manager at Brandywine Global.

“But that said, right now we’ve been in a month of bullishness and optimism and so the mood will swing to skepticism as we wait for actual policies to come out.”

Meanwhile, U.S. retail sales barely rose in November as households cut back on purchases of motor vehicles. The Commerce Department said retail sales edged up 0.1 percent. Economists had forecast overall retail sales increasing 0.3 percent.

In a separate report, the Labor Department said its producer price index for final demand increased 0.4 percent last month, the largest gain since June, after being unchanged in October.

General Motors fell 2.5 percent to $36.40 and Ford declined 1.3 percent to $12.59 following a report that China will soon slap a penalty on an unnamed U.S. automaker for monopolistic behavior.

Hertz Global dropped 1.4 percent to $24.80 after the car rental company said on Tuesday it would replace its chief executive and reduce its board size.

Declining issues outnumbered advancers on the NYSE by 1,445 to 1,133. On the Nasdaq, 1,227 issues fell and 1,028 advanced.

The S&P 500 index showed six new 52-week highs and no new lows, while the Nasdaq recorded 26 new highs and six new lows.

(Reporting by Tanya Agrawal; Editing by Sriraj Kalluvila)

U.S. retail sales slow in November; producer prices increase

A woman sits in Herald Square with bags of shopping during Black Friday sales in Manhattan, New York,

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. retail sales barely rose in November as households cut back on purchases of motor vehicles, suggesting some loss of momentum in economic growth in the fourth quarter.

Other data on Wednesday pointed to steadily rising inflation pressures, with producer prices notching their largest increase in five months in November. The moderation in retail sales came after two straight months of strong gains. With incomes rising and household wealth at record highs, the cool-off in retail sales is likely to be temporary.

Against the backdrop of a tightening labor market and perking inflation, the Federal Reserve is expected to raise interest rates later on Wednesday. The U.S. central bank hiked its overnight benchmark interest rate last December for the first time in nearly a decade.

“There is still strong support for consumer spending, namely steady job growth and wages heading higher. Santa will still be coming to town this year.” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.

Retail sales edged up 0.1 percent last month after rising 0.6 percent in October, the Commerce Department said. Sales were up 3.8 percent from a year ago. Excluding automobiles, gasoline, building materials and food services, retail sales also nudged up 0.1 percent last month after gaining 0.6 percent in October.

These so-called core retail sales correspond most closely with the consumer spending component of gross domestic

product. Economists had forecast overall retail sales increasing 0.3 percent and core sales also gaining 0.3 percent last month.

In a separate report, the Labor Department said its producer price index for final demand increased 0.4 percent last month, the largest gain since June, after being unchanged in October.

In the 12 months through October, the PPI rose 1.3 percent, the biggest gain since November 2014. The PPI rose 0.8 percent in the 12 months through October.

A 0.5 percent increase in the cost of services accounted for more than 80 percent of the rise in the final demand PPI last month. The increase, which followed a 0.3 percent decline in October, was the largest since January.

With producer prices pushing higher, overall inflation is expected to steadily move toward the Fed’s 2 percent target.

The dollar fell to a session low against the yen on the retail sales data, while prices for longer-dated U.S. government bonds rose. U.S. stock index futures fell slightly.

The softer-than-expected retail sales numbers last month suggest a slowdown in consumer spending in the fourth quarter, which could see economists trim their GDP forecasts for the period. Still, consumers should continue to support the economy in the fourth quarter.

The Atlanta Fed is forecasting GDP rising at a 2.6 percent annualized rate in the fourth quarter. The economy grew at a 3.2 percent pace in the third quarter.

Last month, auto sales fell 0.5 percent, the largest decline since March, after increasing 0.5 percent in October. Sales at building material stores rose 0.3 percent.

Receipts at clothing stores were flat, suggesting a weak start to the holiday shopping season. Department stores like Macy’s &lt;M.N&gt; and Kohl’s &lt;KSS.N&gt; are facing intense competition from online retailers such as Amazon &lt;AMZN.O&gt;, which have snatched a large chunk of the market share.

Sales at online retailers gained 0.1 percent last month after surging 1.4 percent in October. Receipts at restaurants and bars increased 0.8 percent, while sales at sporting goods and hobby stores fell 1.0 percent. Receipts at service stations gained 0.3 percent after jumping 2.5 percent in October.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)