U.S. retail sales drop in the month of January. The advance Census Bureau report showed that the retail sales fell 0.3 percent, as compared with expectations of a rise of 0.2 percent. At gasoline stations sales were up 1.6 percent; however, the gain was more than countered by a fall of 1.3 percent in motor vehicle & parts dealers. Stripping autos and gas, retail sales dropped 0.2 percent sequentially, broadly missing the projected gain of 0.5 percent.
After many month of robust growth, spending on building materials dropped, falling 2.4 percent. This fall was only half made up for by a 0.7 percent rise in spending at restaurants and bars. Stripping gas, autos, building materials, and food services, the so-called ‘control group’ used in calculating GDP was flat on the month, as compared with the 0.5 percent rise expected. Gains in the control group were led by miscellaneous, clothing and electronics. Meanwhile, health & personal care, sporting goods and furniture saw declines.
Following a strong of strong retail spending reports to cap off 2017, the fall in January is slightly a head scratcher, noted TD Economics in a research report. The latest prints indicate toward a subdued performance of consumer spending in the first quarter, about 2.4 percent, with the downgrade flowing through to real GDP, which is likely to increase by about 2.5 percent, noted TD Economics in a research report.
“The January decline in retail sales appears to be more of a transitory blip, with spending likely to return to a stronger performance in the following month. This is especially the case given the strong payroll growth, rising wages, and and tax reform that will leave more disposable income in consumers' pockets”, added TD Economics.
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