(March 6): US retail sales declined in January, restrained by weakness at auto dealers as winter weather-related disruptions tempered some activity.
The value of retail purchases, not adjusted for inflation, decreased 0.2% after no change in December, Commerce Department data showed on Friday. Excluding car dealers, sales were little changed.
Seven out of 13 categories posted decreases. Motor vehicle sales dropped 0.9%, while receipts at apparel merchants, gas stations and health and personal care stores also declined.
The report showed a 0.3% increase in so-called control-group sales — which feed into the government’s calculation of goods spending for gross domestic product. The measure excludes food services, auto dealers, building materials stores and gasoline stations.
More modest overall retail spending at the turn of the year has been accompanied by worries about the job market and cost of living. While wealthier households have the wherewithal to purchase non-essential goods, middle- and lower-income consumers may be growing more cautious.
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Separate figures out on Friday showed employers unexpectedly cut jobs in February and the unemployment rate rose, raising doubts about the health of the labour market. Payrolls fell 92,000 and the jobless rate climbed to 4.4%.
Walmart Inc, a bellwether for the economy, last month forecast less earnings growth this year than expected in the wake of subdued US hiring. Home Depot Inc and Lowe’s Cos pointed to lingering consumer anxiety about the economy while noting that they don’t expect tax refunds to trickle into home-improvement spending.
A lengthy winter storm that included significant snowfall and ice across the central and eastern US likely impeded shoppers during the weather event. The Arctic blast triggered the most flight cancellations since the pandemic and left more than one million homes and businesses without power.
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“January retail sales reflected some weather-related disruptions, with consumers shifting more spending online. Spending at food service and drinking places fell during Winter Storm Fern, which began Jan. 23 and kept many people at home. That loss of momentum should reverse in the coming months,” says Eliza Winger of Bloomberg Economics.
Receipts at restaurants and bars, the only service-sector category in the retail report, declined 0.2% in January. Restaurants including Sweetgreen Inc and Chipotle Mexican Grill Inc said that sub-freezing temperatures and winter storms hindered sales.
At the same time, the retail report showed a pickup in sales at non-store retailers and building-materials outlets.
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