U.S. Retail Sales Rebound 3.8% In January, Much More Than Expected

Retail sales in the U.S. showed a substantial rebound in the month of January, according to a report released by the Commerce Department on Wednesday.

The Commerce Department said retail sales soared by 3.8 percent in January after plunging by a revised 2.5 percent in December.

Economists had expected retail sales to jump by 2.0 percent compared to the 1.9 percent slump originally reported for the previous month.

“The sharp December drop followed by a rebound in January is a repeat of the pattern seen in 2018, 2020 and 2021 – which is now very obviously a seasonal adjustment issue linked to shifts in the timing of holiday spending,” said Michael Pearce, Senior US Economist at Capital Economics.

Sales by non-store retailers helped to lead the turnaround, skyrocketing by 14.5 percent in January after plummeting by 11.4 percent in December.

The report also showed significant rebounds in sales by department stores, furniture and home furnishings stores and motor vehicle and parts dealers.

Excluding the sharp increase in motor vehicle and parts sales, retail sales still spiked by 3.3 percent in January following a 2.8 percent nosedive in December. Ex-auto sales were expected to increase by 0.8 percent.

The report showed closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, also soared by 4.8 percent in January after plunging by 4.0 percent in December.

“Even if control sales are flat in February and March, they are on track for a 7% annualized gain, faster than the 4.6% rise in the fourth quarter,” Pearce said.

He added, “While the weak base from December still means first quarter consumption growth will be weak, the risks to our forecast that it slowed to just 0.5% annualized are on the upside.”

Source: Read Full Article