Retail Sales Dip, Then Surge 3.8% in January

U.S. consumers returned to spending in January, following a decline the prior month.

Retail sales surged a seasonally adjusted 3.8% last month, according to the U.S. Commerce Department, well above expectations. Economists polled by Reuters had forecast a 2.0% rise, and the Dow Jones estimate was 2.1%. Excluding auto sales, the retail gain was 3.3%.

Sales in December dipped 2.5% according to revised figures, even lower than the initially reported 1.9% drop.

U.S. retail and food services sales for January 2022 were 13.0 percent (±0.9 percent) above January 2021.

“The retail sector has kicked off the year on a good note, with January sales expanding by 12.3% over the prior year,” says Neil Saunders, managing director of GlobalData. “While very robust, the numbers are not quite as shiny as they may first appear. First, this is the slowest pace of growth since February 2021, and represents a reasonable step down from the 16.6% uplift posted in December. Second, we believe that about 6.9 percentage points of this uplift is down to inflation, so while volumes are positive, they are less impressive than the headline number initially suggests.”

Nonstore retailers (online shopping) jumped 14.5%. Department store sales were up 9.2% and furniture and home furnishings stores business rose 7.2%.

“January sales overcame major headwinds that make the results all the more impressive,” NRF chief economist Jack Kleinhenz said in a statement. “A triad of forces weighed on consumer behavior and spending as weather slammed a large portion of the United States, the omicron variant was relentless, and inflation was escalating. On top of that, the enhanced childcare tax credit ceased at the end of 2021, impacting millions of families. Despite all that, consumers ramped up spending even after a record-breaking holiday season.”