US Retail Sales Beat Expectations in January

RAPAPORT… US retail sales saw their steepest rise in 10 months, with January figures far exceeding analysts’ forecasts as consumers continued spending despite economic challenges.

Revenue grew 3.8% from the previous month, compared with a 2.5% increase in December, according to data the US Census Bureau released Wednesday. January sales jumped 13% compared with a year earlier.

January’s upturn was “nearly double market expectations,” said Sal Guatieri, senior economist and director of economics for BMO Capital Markets.

“The strong rebound in January retail sales, though partly in response to last year’s weak finish and inflated higher prices, suggests consumers still have plenty in the tank to propel the expansion forward this year. Rate hikes won’t cool their jets for a while, making the Federal Reserve’s job of driving down inflation that much harder,” he added.

Analysts had expected sales to remain stagnant in January as several issues weighed on the market, including inflation pressures, labor shortages, extreme weather conditions and a rise in Covid-19 cases. Uncertainty related to international tensions in Russia and China, as well as the end of the government’s enhanced childcare tax credit at the end of 2021, also factored, the National Retail Federation (NRF) explained.

“Despite these concerns, consumers are spending, and the economy remains in good shape,” said NRF CEO Matthew Shay. “We are confident that retail sales growth and overall consumer financial health can continue.”

In January, sales advanced year on year in seven of the nine categories the US Census Bureau monitors. The clothing and accessories segment — which includes jewelry — saw the highest growth, surging 19%. Revenues for the category climbed 0.7% versus December. Online sales across all products rose 9% year on year and 15% compared to the previous month.

Both the NRF and BMO Capital Markets believed retail sales would continue to thrive during the year. However, the NRF cautioned additional obstacles could cause a slowdown.

“Current pressures in the economy should be moderated if election-year political pressures don’t result in policy decisions that compound the challenges our economy is already facing,” Shay added.

Image: Women shopping at a mall. (Shutterstock)