Retail sales in the United States fell more than expected in January, due to a decline in receipts at auto dealerships and gas service stations. Retail sales declined by 0.8% last month, the Commerce Department said on Thursday, likely affected by the winter. Data for December was revised lower showing a sales increase of 0.4% instead of 0.6% as previously reported.
Economists interviewed by Reuters had forecast a 0.1% drop in retail sales. The drop follows a relatively strong performance throughout the festive season. Seasonal factors were less supportive for this January than in previous years, resulting in a large drop in adjusted sales last month. Economists take a more cautious stance before releasing data.
Said Daniel Silver, an economist at JP Morgan in New York. "Individual seasonally adjusted changes for these months should likely be discounted when trying to determine trends for the data."
Although momentum is likely to slow this year, consumer spending remains healthy, on the back of a resilient labor market and household purchasing power that has increased as inflation eases.
A separate report from the Labor Department on Thursday showed initial claims for national unemployment benefits fell 8,000 to a seasonally adjusted 212,000 for the week ending Feb. 10. Claims are around low levels despite a recent wave of high-profile layoffs in the tech and media sectors. Economists forecast 220,000 claims for the latest week. With the labor market still tight, some laid-off workers may easily find new jobs.
Retail sales excluding automobiles, fuel, building materials and food services fell 0.4% in January. This measure of core retail sales most closely matches the consumer spending component of GDP.
Core sales for December were revised down to show an increase of 0.6% instead of 0.8% as previously reported. Economists predict strong growth in services spending in January, which should keep overall consumer spending under control. Consumer spending, which accounts for more than two-thirds of US economic activity, increased at a rapid pace in the fourth quarter, contributing to economic growth at an annual rate of 3.3%.
