January retail sales head in the right direction, according to Commerce and NRF
Coming off of the holiday shopping season, January retail sales turned in positive performances and showed signs of slow but continuing economic improvement, according to data from the United States Department of Commerce and the National Retail Federation (NRF).
The Department of Commerce reported that January retail sales at $401.4 billion were up 0.4 percent from December and up 5.8 percent compared to January 2011. Commerce added that total sales for the November through January period were up 6.3 percent from the same period a year ago. When excluding autos, January retail sales were up 0.7 percent over January.
The NRF reported that January retail sales, which exclude autos, gas stations, and restaurants, were up 0.9 percent on a seasonally-adjusted basis from December and up 4.0 percent on an unadjusted basis annually.
“A slightly improving labor market with gains in payrolls has lifted consumer confidence in January and corresponds with increasing retail sales,” said NRF Chief Economist Jack Kleinhenz in a statement. “However consumer spending alone will not be enough to sustain economic growth or provide a strong foundation for consistent retail sales and growth. We must see improvements in key economic indicators, such as housing and employment.”
Even though retail sales continue to show slow and incremental growth, continued growth is needed over a longer period, as consumer spending accounts for roughly 70 percent of U.S. economic activity.
But even though retail growth is on the slow side, there are some indications that the economy is showing some true signs of recovery, including positive employment reports in recent months and increasing consumer confidence, too.
The trend of slight or flat sequential retail sales increases remains largely intact due to fairly even retail spending at a time when retailers remain cautious on the inventory planning side and postponing commitments until the until the economic outlook becomes clearer, while they are risking stock outages by having very lean inventories.
While retail sales are growing slightly, they are not providing enough of a bump to signal a material increase in economic output.
A noted freight transportation expert said that the gains in retail sales are welcome, but more work needs to be done.
“Slow like the tortoise, we make impressive gains over two-year ago levels,” said Charles “Chuck” Clowdis, Managing Director, North America Global Commerce & Transport Advisory Services, at IHS Global Insight. “Fuel prices ‘fuel’ a large part of the gains however. Nevertheless, cautious optimism prevails. Let’s see if we can put a few consecutive gains together before we pop the Champagne.”