Retail Numbers Higher than Expected
Reports show numbers across the retail industry are on the rise, increasing more than expected last month despite several obstacles, including falling gas prices, the major snowstorm in the Northeast, and slow job growth.
According to the US Department of Commerce, sales jumped up 0.2 percent, which is twice the gain economists had expected. While it may seem small, the rate follows a similar surprise from December, when the initial estimate was a drop in sales by 0.1 percent, which was later revised to another 0.2 percent boost.
Not including typically volatile auto sales (and, similarly, gasoline, sales for both of which have been stifled by lower prices) retail sales both online and at traditional brick-and-mortar stores increased 0.4 percent last month. Economists had only expected an increase of 0.3 percent.
More specifically, online sales increased 1.6 percent, roughly twice the pace of both grocery store and general merchandise sales. Building supply stores saw a jump of about 0.6 percent while clothing stores noted an increase of 0.2 percent.
However, these gains served to offset a few declines, namely in furniture store and general merchandise outlet sales (down 0.5 percent), sporting goods stores (down 2.1 percent) and restaurants and bars (down 0.5 percent, as well).
“The markets may have decided that the U.S. is headed for recession, but obviously no one told U.S. consumers,” explains Paul Ashworth, of Capital Economics, in a research note. He goes on to explain that low prices can cause gas station sales to fall sharplly, but “otherwise, sales were strong across the board.”
Last year, consumer spending helped to encourage economic growth during a time when America could feel the pressure from weaker economies over seas and a bit of pullback in energy investments as a response to lower oil prices.
However, spending has already slowed, not even halfway through the second month of 2016. This was largely due to slow wage gains and while pay increases have showed some signs of improvement—in January—employment growth slowed to 151,000 after an average monthly gain of 279,000 through the fourth quarter of last year.
Of course, analysts are now advising that outlook will probably remain somewhat high, thanks to more affordable fuel, lower household debt, and a robustly recovering labor market.