US retail sales data deepens year-end gloom

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WASHINGTON, Dec 27 (AFP): Christmas retail sales plunged in the United States (US), a poll showed yesterday, as Japan reported record cuts in production and more signs emerged that Spain has entered a recession.
A leading think tank in London also forecast the British economy would shrink by 2.9 per cent next year in the biggest contraction since the end of World War II as retailers slashed prices in a bid to boost post-Christmas sales.
US retail sales dropped by nearly eight per cent for the traditional November-December shopping period, making it one of the worst holiday shopping periods in decades, the MasterCard Inc.'s SpendingPulse unit said in a report.
"A difficult economic environment combined with unfavorable weather... made 2008 one of the most challenging holiday shopping seasons in decades," said Michael McNamara, vice president of research and analysis for SpendingPulse.
Among the worst hit were the apparel, and electronics and appliance categories.
The holiday season is seen as a make-or-break period for many retailers and a key for the struggling US economy, which relies on consumer spending for 70 per cent of activity.
US share prices shrugged off the gloomy data and ended higher as investors cheered a US Federal Reserve decision Wednesday throwing a lifeline to ailing automaker General Motors's partly owned finance arm.
Meanwhile, investigators looking into the 50 billion dollar Bernard Madoff scandal are continuing to probe the role of family members who worked with him as well as key executives and "feeder funds" linked to his firm, US media reported.
They are also reportedly probing the role of a small accounting firm that handled the firm's bookkeeping after Madoff's arrest for allegedly carrying out a massive fraud scheme that has hurt thousands of investors across the globe.
Bearish data across the Atlantic Friday also underlined the fragile state of the global economy.
The Centre for Economics and Business Research (CEBR) in London issued one of the grimmest forecasts yet for the British economy in 2009.
"We're anticipating 2009 to have GDP (gross domestic product) levels 2.9 per cent lower than 2008. That'll be the worst one-year fall in GDP since 1946," CEBR managing director Mark Pragnell told BBC radio.
The government has predicted a GDP contraction of up to 1.25 per cent.
There were also more discouraging reports from European retailers.
Shopkeepers in Athens said they would defy unions and open on Sunday after disappointing sales in the run-up to Christmas. In Britain stores were touting discounts as high as 90 per cent in a bid to attract shoppers in the sales after a November, which was down on 2007.
Also in Europe, Spain's economy faced a bleak 2009, as more signs emerged that the country has entered a recession.
"It must be made known that we are currently living through the most difficult and serious moments" of the economic crisis and "2009 will be a difficult year," Spanish Prime Minister Jose Luis Rodriguez Zapatero warned Friday.
Zapatero's bleak assessment mirrors the views of financial experts who say Spain's economy has entered a recession and warned that GDP could fall 1.5 per cent next year.
In Japan, the world's second biggest economy, the government said industrial production in November fell by 8.1 per cent from the previous month-the fastest rate since the government began releasing the statistics in 1953.
The Japanese yen came under pressure in Asian trade after the discouraging data report. However, Tokyo's benchmark Nikkei index rose 1.63 per cent to a six-week high on bargain-hunting in thin holiday trade.
Elsewhere in Asia, Thailand's new prime minister, Abhisit Vejjajiva, told the news agency in an interview that the downturn would be tougher than the 1997 Asian financial crisis because of Thailand's joint political and economic problems.
World oil prices meanwhile rebounded Friday after tumbling to four-year lows before Christmas, as reports emerged that the United Arab Emirates would slash production in line with an OPEC output cutback.
New York's main contract, light sweet crude for February delivery, rose to 37.71 dollars, up 2.36 dollars from Wednesday's closing price. Markets were closed for Christmas on Thursday.
Brent North Sea crude for February delivery, which traded on London's InterContinental Exchange, was up 1.76 dollars to 38.37 dollars.