The United States economy stumbled again this week with the release of crucial retail sales, consumer confidence and inflation data that were uniformly worse than analysts had expected.
According to the US Commerce Department, retail sales rose by 0,6% in August, below Wall Street forecasts of 1,4%. In July retail sales grew at 1,3%.
The figures are a blow to the White House. Consumer spending accounts for two-thirds of US economic activity and the Bush administration hoped tax cuts and rebate cheques would lift the limping economy.
Consumer sentiment dipped in early September as the nascent recovery continued to fail to create jobs.
A report on US wholesale prices, an inflation indicator, showed a 0,4% increase, largely owing to volatile food and energy prices.
The reports weighed on Wall Street, with the Dow Jones index of leading shares falling by as much as 70 points shortly after the open of trading on Monday.
The data, suggesting that the US economy had not begun a sustained recovery, pushed the dollar lower against the euro. The euro, already trading at a four-week high, was up by a further 0,4% in early trade on Friday at $1,1253. Sterling hit a month high against the dollar, climbing to $1,6035.
Sentiment was not helped by Oracle, the world’s second-largest software firm, which reported disappointing sales. Revenues were just 2% higher and sales of new software licences, a closely watched measure of business momentum, fell by 7%.
The economic data will be closely examined by US Federal Reserve policymakers, who meet next Tuesday to review interest rates.
There have been increasing doubts about the sustainability of the US recovery, as recent data have shown a lack of job creation. A weak labour market could put further pressure on confidence and spending.
The closely observed University of Michigan’s consumer sentiment index showed a drop to 88,2 from 89,3 in August, defying expectations for a rise to 90. — Â