Christmas and the holiday season may not be so cheerful for retailers in some major economies. In the UK Reuters reports that Retailers face worst Christmas in 25 yrs:

Retailers may face their worst Christmas in a quarter of a century as warm weather and hikes in fuel bills and interest rates cause shoppers to pinch pennies, a leading analyst predicted on Monday.

Seymour Pierce's Richard Ratner, who has followed the sector for 25 years, said his data showed sales for the bulk of the UK rag trade were down 10 to 20 percent in the past two weeks.

 "We now believe that Christmas in 2006 will be worse than 2005 and could be as difficult as or even softer than 2004, which was the worst Christmas for 23 years. If the latter is the case, it will make it the worst for 25 years," Ratner wrote.

News are not much better in Japan where, as reported by Bloomberg Japan's Retail Sales Unexpectedly Drop as Consumers Spend Less on Clothes:

Japan's retail sales unexpectedly fell for a second month, reducing the likelihood that consumer spending will accelerate and lead to an increase in the lowest interest rates among the world's seven biggest economies.

Receipts at retailers, including gas stations, department stores and supermarkets, fell a seasonally adjusted 0.2 percent in October from a month earlier, the trade ministry said today.

While at the same time today Asian Stocks Drop, Led by Toyota, Samsung on Slowing Sales in Japan, U.S.

In the meanwhile in the U.S. the initial hype that Black Friday and Thanksgiving weekend sales were sharply up has turned out to be mostly smoke and spin. The alleged 6% increase in sales reported by Shopper Trak is a guess based on foot traffic not actual sales. As pointed out by a commentator on my blog:

I read the ShopperTrak story on Friday, and checked their website and I doubt they have any sales data. The company has 45,000 video cameras installed at retailers, which they use to monitor foot traffic at various locations in a store. They can even differentiate between an adult vs a child. I think they estimate sales based on foot traffic. Perhaps they saw foot traffic was up 6% on Thursday and figured that was a 6% increase in sales. However, we can't assume that sales were higher. Maybe the 6% increase in foot traffic was people bargain shopping, and maybe some were looky-loos. Maybe they did buy 6% more or 10% more. We just don't know, and the journalists who wrote the ShopperTrak story did a real disservice by leading the reader to believe that ShopperTrak has access to company's databases and sales information.

So much for the hype that sales increased 6% this year on Black Friday. And the same ShopperTrak reported today that, considering both Black Friday and Saturday sales were up 3.4% not 6% y-o-y; this means that controlling for inflation retail sales were flat in real terms during this Thanksgiving weekend.

Also, quite correctly the US stock market sharply reacted downward on Monday not to spin on the alleged surge in Thanksgiving sales but to the hard numbers - not guessestimates - coming from the largest US retailer - Wal Mart - that reported a fall of 0.1% in its November same store sales, the first time in a decade.

Also, serious retail analysts who follow closely the retail market presented today a much more sober assessment of the Thanksgiving weekend as disappointing. A report by the retail analysts for Citibank who spent the weekend checking actual retail sales among major retailers came to the following conclusions:

"Black Friday sales, while not a complete disappointment, were likely not strong enough to remove investor holiday spending uncertainty....Members of the media and Wall Street analysts have once again been quick to comment on Black Friday sales. They point to long check out lines and full shopping malls parking lots to support their conclusion that retail sales growth will be strong this holiday. Are they correct? We have come to the conclusion over the years that checkout lines that run around to the back of the store are not necessarily indicative of sales growth. If a checkout line only ran around half the store at 7.30am this year versus three quarters of the store last year, a retailer could be in for some trouble. Our Black Friday store hours gave us some encouragement, but also there were some signs of concern....Areas for Black Friday concern? (1) Store traffic throughout the retailers we visited dropped off even faster this year than last. By 9.00am there were no longer checkout lines at stores like Best Buy, CompUSA, Target and Wal Mart..."

In the meanwhile, as reported by Reuters today,  Chicago Fed Midwest factory activity falls in October :

The Chicago Federal Reserve Bank said on Monday its Midwest manufacturing index fell in October, hurt mostly by weakness in the auto sector. The index dropped 0.4 percent to a seasonally adjusted 106.1 from a upwardly revised 106.5 in September, originally reported at 106.4. Three of four regional factory sectors fell in October.

I would thus not be surprised if the November ISM for manufacturing will turn out to be even weaker than the October one that - at 51.2 - was already signaling borderline recession conditions in the manufacturing sector.

So a sober assessment of the beginning of the holiday sales season in the UK, Japan and the US does not lead to any cheerful optimism.