WASHINGTON: U.S. retail sales fell more than expected in January, likely as frigid temperatures kept consumers from automobile showrooms.
Retail sales dropped 0.9% last month after an upwardly revised 0.7% increase in December, the Commerce Department’s Census Bureau said on Friday. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, dipping 0.1%.
Much of the country was blanketed by snowstorms and freezing temperatures last month. Wildfires in California could also have hurt sales.
Some of the decline was likely payback after four straight months of strong gains, partly reflecting pre-emptive buying by consumers in anticipation of tariffs on imports that would raise prices for goods.
A 25% tariff on Mexican and Canadian goods was delayed until March. An additional 10% levy on goods from China went into effect this month.
Spending remains underpinned by labor market resilience, which is keeping wage growth elevated and the economic expansion on track. Household wealth is at record highs thanks to high house prices, though the stock market has ceded some gains.
Retail sales excluding automobiles, gasoline, building materials and food services declined 0.8% last month after an upwardly revised 0.8% jump in December.
US import prices rise moderately in January
These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Economists had forecast core retail sales rising 0.3% following a previously reported 0.7% surge in December.
Robust consumer spending helped to offset the drag on GDP from inventories being nearly drawn down in the fourth quarter. The economy grew at a 2.3% annualized rate last quarter after expanding at a 3.1% pace in the July-September quarter.
The strong performance in consumer spending last quarter put it on a higher growth trajectory in the January-March quarter.
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