US figures point towards slowdown

The US economic problems have seen the dollar tumble in value

US retail sales and producer price figures have pointed to a weakening of demand in the world's largest economy.

The data comes as analysts are trying to gauge the impact of a slump in the US real estate market and the impact of a global credit crunch.

According to the Commerce Department, retail sales rose by 0.2% in October, compared with September's 0.7% gain

The Labor Department, meanwhile, said that producer prices added 0.1% last month, less than many market forecasts.

In the past two months, the US Federal Reserve has cut interest rates in an effort to revive economic growth and take some pressure off the consumer.

However, it is unclear how much respite the lower borrowing costs have given shoppers who are also being hit by falling house prices, higher food costs, more expensive loans and record petrol prices.

"The consumer continues to shop, though most of the additional money is paying for the higher costs of gasoline and food," said Joel Naroff of Naroff Economic Advisors.

Consumer spending is a vital driver of economic growth, and accounts for more than two thirds of annual gross domestic product in the US.

Ian Shepherdson of High Frequency Economics said that the trend of growth in retail sales was slowing and would probably continue to do so over the end of year and Christmas period.

"We expect a further deterioration as consumers cut back in the face of soaring petrol prices, falling stock prices and the continued disaster in housing," Mr Shepherdson said.

"The holiday season will be terrible."