US retail sales decline 0.3% in January, end-of-season Dec revised as lower
U.S. retail sales unexpectedly fell by 0.3 percent in January, recording the biggest decline since February 2017. Economists, as reported by Reuters, had previously estimated retail sales climbing 0.2 percent in January.
December sales receipts were also revised lower, according to Commerce Department data just released. Figures for December now show sales virtually unchanged instead of the previously reported rise of 0.4 percent.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was reported to have increased at a 3.8 percent annualized rate in the fourth quarter, but most of it took place earlier in the quarter. Spending, as it would now appear, slowed towards the end of the year.
Category-wise, data reveals that receipts were pulled down by 7 of the 13 major retail categories, led by automobile purchases (-1.3 percent), home centers (-2.4 percent) and personal care (-1.2 percent).
Still, there were some stronger performers than others. Sales of electronics and appliances rose 0.5 percent, as did apparel, which saw the largest category rise of 1.2 percent.
The dip in retail receipts comes as a surprise given recent job growth, wage gains and tax cuts — all expected to fuel consumer spending. The U.S. economy grew at a cheery 2.6 percent pace in the final three months of 2017.
However, rising inflation could be eating away at some of those gains — U.S. inflation came in at 2.1 percent in January compared with a year earlier.
The National Retail Federation (NRF) has, however, contested the pessimism by releasing year-over-year retail sales growth figures earlier today, which earlier reported January sales up 5.4 percent over last year.
“Some observers are spinning this as a disappointing month but you’ve got to keep in mind that we’re coming off one of the strongest holiday seasons in years,” said NRF Chief Economist Jack Kleinhenz. “It’s also difficult to draw conclusions from month-to-month changes because of the huge seasonal-adjustment factors.”
Kleinhenz predicts that retail sales will bounce back in February and demonstrate steady growth through the year, on the expectation of a healthy job market and wage growth.
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