Retail expenditures advanced in January for the third month in a row led by strong gains in internet and automobiles sales.
The 0.2 percent rise equaled the revised December increase which was originally reported as a 0.1 percent decline, according to the Commerce Department on Friday. Economists had forecast a gain of 0.1 percent.
Sales in January were 3.4 percent ahead of last year, up from the 2.4 percent increase in December, for the best annual gain in a year. Subtracting purchases of gasoline, which because of the falling price lowered total receipts, and cars, sales rose 0.4 percent in January, better than the 0.3 percent estimate. The prior month was revised higher to 0.1 percent from flat. Retail sales figures are not corrected for price changes.
This sustained improvement in retail consumption, that 70 percent backbone of the U. S. economy, comes after three straight months of flat or negative sales in August, September and October. The figures of those months had prompted concerns that Americans, buffeted by stagnant wages, a lack of well-paying jobs and turmoil in financial markets were choosing commercial reticence over consumerism, with all the negatives that implied for U.S. economic growth.
Wage increase in the last three months many have, combined with the year-long fall in gasoline prices that is beginning to appear permanent, encouraged U.S. consumers that it was safe to spend some of their extra cash.
Average hourly earnings jumped 0.5 percent in January, much better than the 0.3 percent forecast and the largest monthly gain--up from flat in December--in twelve months.
More tellingly for households, annual wages were up 2.5 percent in January, which followed gains of 2.7 percent in December, 2.4 percent in November and 2.6 percent in October. The 2.5 percent three month moving average last month is the best prolonged wage advance since September 2009.
The sales numbers that are included in the government’s gross domestic product calculation, known as the 'retail sales control group' which excludes food, automobiles, home improvement and gasoline purchases, climbed 0.6 percent in January, double the forecast. This categoryhad dipped 0.3 percent in December. The annual gain rose to 3.1 percent, the highest in four months.
The Atlanta Federal Reserve cited consumption growth in raising its GDPNow estimate for first quarter annualized GDP growth to 2.7 percent Friday from 2.5 percent on February 9th.
Economic growth in the U.S. slowed to a 0.7 perceny annual pace in the final three months of last year as previously estimated lackluster consumer spending combined with business cutbacks as firms attempted to clear accumulated inventory and reduced capital investment to retard growth. The first revision of 4th quarter GDP will be released on the 26th of this month.
Eight of the 13 major retail categories tracked by the Commerce Department saw demand rise in January.
On-line purchases rose the most at 1.6 percent, its biggest gain in 11 months, followed by a 1.2 percent increase in 'miscellaneous store retailers', and an 0.8 percent gain in general merchandise, the largest jump there since May. Automobiles and parts purchases, helped by incentives at dealers, rose 0.6 percent as did building materials and gardening products.
Automobile and light trucks sales were running at a 17.5 million annual pace last month, the best rate for any January since 2006 and slightly more than the 17.4 million total for all of 2015. Demand was strong for pickup trucks and SUVs.
Receipts at filling stations dropped 3.1 percent last month, the most since September, as the decline in crude oil works its way through to the pumps. The nationwide average price for a gallon of regular gasoline was $1.699 as of February 11th, according to the American Automobile Association, the lowest level in seven years.
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