January US Retail Sales Post Largest Increase Since March 2021

Retail sales in the United States rose by 3% to $697 billion in January, the US Census Bureau reported on Wednesday.[0] In comparison to December’s 1.1% decrease, the reading was better than expected, with the market predicting an increase of 1.8%.[1] Retail Sales, excluding Auto Sales, grew by 2.3% in the same period, surpassing analysts’ forecast of a 0.8% increase.[1]

On Wednesday, the government reported that retail sales increased by 3% in January, after having decreased in the two months prior.[2] The increase in question was the largest since March 2021, spanning over a single month.[3] Retailers saw a much higher than anticipated increase in sales in January, with customers continuing to shop despite mounting inflationary pressures.[4]

Retail Sales for January saw a significant rebound, far surpassing the anticipated +1.9%. The actual figure came out to +3.0%, compared to the -1.1% from the previous month. This was a pleasant surprise after a weaker-than-expected holiday season.[5] The Retail Sales figures for the past four out of the last six months have been negative, making this the best print since October.[6] Consumer confidence has recently been bolstered by the creation of healthy employment opportunities and increased real earnings.[6]

Excluding vehicle sales, core sales increased by 2.3%, surpassing the anticipated 0.8% increase for the month.[7] Excluding autos, gas, building materials, and food services, the control group in the report followed the same trend, increasing by 1.7% as opposed to the anticipated 0.8% rise.[8]

Total sales from November through January were up 6.1% from the same period a year ago. Retail sales in January grew by 6.4% compared to the same month in 2022, with data from November to January (inclusive of the holiday season) indicating a 6.1% rise.

The Federal Reserve will view these figures as evidence in favor of its continued battle against inflation.[9] The most recent inflation report revealed that prices still remain elevated in the US, at an uncomfortable level. Furthermore, the January US Jobs Report went far beyond expectations with an impressive 517k jobs created, surpassing the expected 185k jobs.[9] The US economy is continuing to improve, with a stronger jobs market, better retail sales, and better manufacturing conditions. This gives the Federal Reserve more leeway to keep rates higher for longer if they deem it necessary.[9]

0. “Retail Sales Surged in January. That’s Bad for the Fed.” Barron’s, 15 Feb. 2023, https://www.barrons.com/articles/january-us-retail-sales-report-today-194c7e25

1. “US: Retail Sales rise by 3% in January vs. 1.8% expected” Forex Factory, 15 Feb. 2023, https://www.forexfactory.com/news/1205804-us-retail-sales-rise-by-3-in-january

2. “Retail Sales Jump as Americans Defy Inflation and Rate Hikes” Newsmax, 15 Feb. 2023, https://www.newsmax.com/finance/streettalk/retail-sales-consumer-demand-inflation/2023/02/15/id/1108754/

3. “Retail sales surge 3% in January despite stubbornly high inflation” Fox Business, 15 Feb. 2023, https://www.foxbusiness.com/economy/retail-sales-surge-january-stubbornly-high-inflation

4. “Retail sales surged in January, putting yet more pressure on the Fed” Channel3000.com – WISC-TV3, 15 Feb. 2023, https://www.channel3000.com/news/money/retail-sales-surged-in-january-putting-yet-more-pressure-on-the-fed/article_f34b1118-490e-579e-b1af-1bbf7e15ffb5.html

5. “Retail Sales Increased in January” CPAPracticeAdvisor.com, 15 Feb. 2023, https://www.cpapracticeadvisor.com/2023/02/15/retail-sales-increased-in-january/76808/

6. “Retail Sales, Empire State Better than Expected” Zacks Investment Research, 15 Feb. 2023, https://www.zacks.com/stock/news/2054744/retail-sales-empire-state-better-than-expected

7. “US Retail Sales Jump 3% In January As Inflation Continues To Fall: What Investors Need To Know – SPDR S&P” Benzinga, 15 Feb. 2023, https://www.benzinga.com/news/23/02/30923643/us-retail-sales-climbed-3-in-january-as-inflation-continues-to-fall-what-investors-need-to-know

8. “Gold price drops below $1850 as U.S. retail sales surprise on the upside in January” Kitco NEWS, 15 Feb. 2023, https://www.kitco.com/news/2023-02-15/Gold-price-drops-below-1-850-as-U-S-retail-sales-surprise-on-the-upside-in-January.html

9. “US Retail Sales Beat Expectations, US Dollar (DXY) Continues to Move Higher” DailyFX, 15 Feb. 2023, https://www.dailyfx.com/news/us-retail-sales-beat-expectations-us-dollar-dxy-continues-to-move-higher-20230215.html