Shoppers buy more than expected in January, sending retail sales up 0.2%

The Commerce Department is reporting January retail sales, which follow a disappointing holiday season for many retailers.

The Commerce Department is reporting January retail sales, which follow a disappointing holiday season for many retailers.

(Carmine Galasso / Associated Press)

Consumers indulged in more retail sales than expected in January, a positive sign for retailers after a disappointing holiday season.

Last month’s sales climbed 0.2% to $449.9 billion from December, the Commerce Department said Friday. Wall Street analysts had predicted an increase of 0.1%.

Retail sales rose even higher, up 0.4%, when gas sales were stripped out. December sales also were revised upward to 0.2%, from an initial estimated decline of 0.1%.

Economists have been predicting for more than a year that falling gas prices and an improved job market would boost spending. But retail sales have lagged as many consumers opted to put the savings in the bank or use it to pay down debts.

The spending uptick over the last two months could signal that consumers are ready to open their wallets after not splurging in the months leading up to Christmas. The National Retail Federation has reported that combined sales in November and December increased just 3%, below the original forecast of 3.7%.


Analysts say the January sales figure also could indicate that consumers aren’t fazed by the recent stock market turmoil and concerns over economic stability sparked in part by volatility in China. It helps that wages are picking up too, growing 2.5% from a year earlier, according to data released by the Labor Department last week.

“There are a number of more positive underlying factors that should help ease up growth as we move into February and beyond,” said Neil Saunders, chief executive of retail consulting firm Conlumino, in a note.

But he added that consumers remain uncertain, and that could continue to restrain their spending.

“The vagaries of markets and a general lack of economic momentum are both fueling consumers’ caution about how this year will pan out,” he said. “It is resulting in a mentality that is more inclined to save rather than spend.”

Retail sales are considered a bellwether of consumer spending, which makes up two-thirds of U.S. economic activity.

Nine out of 13 categories in January enjoyed growth.

Building material and garden suppliers rose 0.6%, while clothing and accessories stores climbed 0.2%. Appliance and electronics stores grew 0.1%

Gas stations reported a drop of 3.1%, reflecting the sharp decline in gas prices.

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