Retail sales in January are slow to start to the year

Retail sales numbers did not get out of the gate quickly to begin 2018, according to data issued today by the United States Department of Commerce and the National Retail Federation (NRF).

Commerce reported that its advanced estimate of U.S. retail and food service sales for January were down 0.3% compared to December at $492 billion but were up 3.6% on an annual basis. And it added that total retail sales from November 2017 through January 2018 rose 4.9% compared to the same period a year ago.

Non-store retail sales, which include e-commerce sales, for the month saw a 10.2% annual increase. Furniture and home furniture sales were up 6.6%, electronics and appliance stores sales saw a 2.9% gain, and food and beverage stores rose 4.3%.

NRF data pointed to a 0.26% decline in retail sales from December to January, with annual sales up 5.4%. NRF’s data does not include automobiles, gas stations, and restaurants.

NRF’s January retail sales data follows its previously-announced 5.1% unadjusted year-over-year gain in holiday sales for November and December, which it said is down from its initial estimate of 5.5%. It also recently issued its 2018 retail sales forecast, which is calling for a 3.8%-to-4.4% annual gain compared to 2017. 

“These numbers reinforce a positive start to 2018 that reflects ongoing consumer optimism brought about by solid economic fundamentals,” NRF Chief Economist Jack Kleinhenz said in a blog posting. “Consumer spending continues to grow at a steady pace and is showing year-over-year increases across almost all retail sectors. Employment has increased, labor markets are tightening and wage growth is on the rise. Stock market headlines are a concern for some shoppers, but households have the wherewithal to spend, and the tax cuts consumers are now seeing in their paychecks will bring an added boost. Some observers are spinning this as a disappointing month but you’ve got to keep in mind that we’re coming off one of the strongest holiday seasons in years. It’s also difficult to draw conclusions from month-to-month changes because of the huge seasonal-adjustment factors.”

Some of NRF’s key retail sales findings for January include:

Online and other non-store sales were up 13.2 percent year-over-year and were unchanged from December;
Furniture and home furnishings stores were up 6.6 percent year-over-year but down 0.4 percent from December seasonally adjusted;
Building materials and garden supply stores were up 6 percent year-over-year but down 2.4 percent from December seasonally adjusted;
Clothing and clothing accessory stores were up 3.1 percent year-over-year and up 1.2 percent from December seasonally adjusted;
General merchandise stores were up 3 percent year-over-year and up 0.2 percent from December seasonally adjusted; and
Electronics and appliance stores were up 2.9 percent year-over-year and up 0.5 percent from December seasonally adjusted
With January retail sales down compared to a strong fourth quarter finish, Chris Christopher, Executive Director, US and Consumer Economics, IHS Markit, and Kathleen Navin, Director, Macroeconomic Advisers by IHS Markit, observed in a research note that core sales—the portion of sales that bears directly on the firm’s tracking for personal consumption—were flat in January, in contrast to its estimate for a healthy gain.

“Rising gasoline prices drove consumers to spend more at the pump in January,” they wrote. “Colder weather may have been the reason for the surge in spending at clothing and department stores while deep price discounting may have propelled electronics stores into positive territory. The colder weather, however, likely also contributed to less spending at building materials and garden supply stores.”