LDN - Business

U.S. retail sales rise in January; December revised sharply down

[March 11, 2019] WASHINGTON, March 11 - U.S. retail sales unexpectedly rose in January, lifted by an increase in purchases of building materials and discretionary spending, but receipts in December were much weaker than initially thought.

The Commerce Department said on Monday retail sales rose 0.2 percent. Data for December was revised down to show retail sales dropping 1.6 percent instead of tumbling 1.2 percent as previously reported. The drop in December was the biggest since September 2009 when the economy was emerging from recession.

Economists polled by Reuters had forecast retail sales to be unchanged in January. Retail sales in January increased 2.3 percent from a year ago.

The January retail sales report was delayed by a 35-day partial shutdown of the federal government that ended on Jan. 25. February's retail sales report, which was scheduled for publication on Thursday, will be released on April 1.

Excluding automobiles, gasoline, building materials and food services, retail sales rebounded 1.1 percent in January after a downwardly revised 2.3 percent plunge in December. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

They were previously reported to have decreased 1.7 percent in December. The downward revision to December core retail sales could have an impact on the government's fourth-quarter gross domestic product estimate.

The government reported last month that the economy grew at a 2.6 percent annualized rate in the last three months of 2018.

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People walk with shopping bags at Roosevelt Field mall in Garden City, New York, U.S., December 7, 2018. REUTERS/Shannon Stapleton

However, December reports on the trade deficit and construction spending have led economists to believe fourth-quarter GDP growth estimate would be revised lower when the government publishes its revisions later this month.

The rebound in January core retail sales will probably do little to change expectations of a significant slowdown in economic activity in the first quarter. Growth estimates for the first quarter are below a 1.5 percent pace.

In January, online and mail-order retail sales increased 2.6 percent, the biggest gain since December 2017. Receipts at auto dealerships tumbled 2.4 percent in January, the biggest drop since January 2014, after gaining 0.3 percent in the prior month. Sales at building material stores increased 3.3 percent, the most since September 2017.

Receipts at service stations fell 2.0 percent reflecting cheaper gasoline prices. There were declines in sales at clothing and furniture stores.

Sales at restaurants and bars rose 0.7 percent and spending at hobby, musical instrument and book stores increased 4.8 percent, the largest advance since January 2013.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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