Key Takeaways
- US retail sales for December registered a flat 0.0% month-over-month, significantly underperforming expectations of a 0.4% rise and marking a sharp deceleration from the previous month's 0.6% gain, signaling a potential slowdown in consumer spending.
- The US Employment Cost Index (ECI) for the fourth quarter increased by 0.7% quarter-over-quarter, falling short of the 0.8% estimate and the prior quarter's 0.8% rise, suggesting moderating labor cost pressures.
- US Ambassador to NATO Matthew Whitaker called for Europe to assume greater responsibility for its conventional defense, indicating a strategic shift towards increased burden-sharing within the alliance.
- BP (BP) CFO stated that the energy giant is nearing its debt reduction target, which would pave the way for the reintroduction of share buybacks, potentially boosting shareholder returns.
- Spot gold pared earlier losses after the release of the mixed US economic data, last trading down 0.2% at $5,052.89 per ounce, reflecting market sensitivity to economic indicators.
The US economy presented a mixed bag of data today, with retail sales unexpectedly stalling in December and employment costs rising less than anticipated in the fourth quarter. These figures come amidst significant geopolitical developments, including calls for Europe to shoulder more of its defense burden within NATO and corporate news from energy major BP (BP).
Retail Sales and Employment Costs Point to Economic Moderation
US retail sales in December showed no growth month-over-month (0.0%), a notable miss against the expected 0.4% increase and a slowdown from November's 0.6% rise. This flat performance in both headline retail sales and core retail sales (excluding autos) suggests a cooling in consumer spending as the year concluded.
Concurrently, the US Employment Cost Index (ECI) for the fourth quarter saw a 0.7% increase, below the estimated 0.8% and the previous quarter's 0.8% gain. This moderation in labor costs could be a welcome sign for inflation-watchers, though White House Trade Advisor Navarro indicated he was not expecting a weak jobs number and suggested a need to revise expectations on monthly job figures.
Further economic data revealed that the US Import Price Index rose 0.1% month-over-month in December, matching expectations but slowing from the prior 0.4%. Year-over-year, import prices were flat at 0.0%. Export prices, however, increased 0.3% month-over-month and 3.1% year-over-year. Following these releases, spot gold initially pared losses, trading down 0.2% at $5,052.89/oz.
NATO Urges European Self-Reliance in Defense
In geopolitical news, US Ambassador to NATO Matthew Whitaker stated a clear expectation for Europe to assume greater responsibility for the conventional defense of the European continent. Whitaker emphasized that any steps allowing allies to "step up and do more and take on more leadership in the alliance is a good news story."
Discussions also touched upon the Prioritized Ukraine Requirements List (PURL) weapons purchase program for Ukraine, with Whitaker anticipating "more announcements at ministerial" meetings. This push for increased European contribution aligns with a broader US strategy to balance defense burdens among NATO members.
BP Nears Debt Target, Eyes Buybacks
On the corporate front, BP's (BP) Chief Financial Officer announced that the company is close to reaching its debt reduction target. Once this milestone is achieved, BP will consider reintroducing share buybacks, which could provide a significant return to shareholders. This development follows a period of strategic financial management by the energy major.
Elon Musk Criticizes UK Leadership
Separately, Elon Musk voiced strong criticism of the UK, accusing its leaders of "authoritarian behavior" and labeling the country "Orwell’s worst nightmare." Musk specifically criticized the Justice Ministry for deleting court records and described the actions as "tyrannical." Tensions between Musk and the UK have reportedly escalated, particularly after regulator Ofcom initiated a probe.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.