USA retail sales increased in January in broad-based advance

Partly reflecting an increase in auto sales, the Commerce Department released a report on Friday showing that USA retail sales rose by slightly more than anticipated in the month of January.

Retail sales totaled $449.9 billion in January, up 3.4% from a year ago, according to the data that is not adjusted for price changes.

Core Retail Sales (ex Autos) for the same period declined 0.1%, higher than the 0.0% expected; prior month was also revised higher from -0.1% to 0.1%.

United States shoppers spent 0.2% more on retail and food services, following an upwardly revised 0.2% increase in December.

The retail control group sales, which are factored into gross domestic product, had a 0.6 percent increase above the market expectation of 0.3 percent.

Receipts at gasoline stations dropped 3.1% last month, the most since September, the retail sales report showed. Americans stepped up spending across several major categories, including vehicles, groceries and building materials.

The January and December growth numbers were suggest “consumer spending may not be as weak as thought, especially given the lack of inflation”, said Scott Hoyt of Moody’s Analytics.

The monthly gains in sales were widespread, with only furniture and home furnishings stores (down 0.5%), sporting goods (down 2.1%), department stores (down 0.8%) and restaurants and bars (down 0.5%).

Wages rose and unemployment fell in the first month of the year, the Labor Department said last week, providing a strong foundation for spending growth.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, “All things considered, it appears that the net impact of the record wet AND warm weather in December was negative, with a clear rebound in January as the weather returned to more seasonal norms”. But it added that growth in spending is expected to come from jobs growth as opposed to higher wages.

While a decline in import price index is positive for the US economy, this is largely attributed to a stronger USA dollar, compared to other currencies, and the weakness in the global economy, which makes foreign goods less expensive for the American public.