US retail sales rise as consumers shrug off stock price drop

Sales at USA retailers rose 0.2% in January, as consumers boosted purchases of new cars and groceries and shopped more online.

Core Retail Sales (ex Autos) for the same period declined 0.1%, higher than the 0.0% expected; prior month was also revised higher from -0.1% to 0.1%.

Total retail sales excluding food services and automotive were up 3.1 percent in January.

The prices the US paid for imported goods, also known as import price index, fell to 1.1 percent in January due to low oil prices.

Apparel sales rose 0.2%, electronics and appliance sales rose 0.1%, and sporting goods and hobby stores sales dropped 2.1%.

The strong dollar and continued consumer wariness about the economy has muted spending this past quarter, though some growth in wages and a more confident labor market is finally helping drive some spending. Excluding both categories, sales were up 0.4 per cent last month. Compared with a year earlier, sales grew 3.4 per cent. Economists polled by Reuters had forecast core retail sales increasing 0.3 per cent last month.

As the WSJ reports, the early weeks of 2016 “were marked by wild swings in stocks driven by currency volatility in China and further drops in oil prices”.

The S&P 500 was up 14 points at 1,844 after nearly an hour of trading, while the more narrowly-based Dow Jones 30 was up 125 at 15,786.

Economists have been predicting for more than a year that falling gas prices and an improved job market would boost spending. Other recent data has suggested Americans may be starting to open their wallets as their incomes continue to pick up.

“While next week’s data on consumer prices are needed to refine our estimate of January real consumption growth, this morning’s release supports our expectation that consumption growth will rebound in Q1”, Barclays’s Jesse Hurwitz said.

Demand held up even after a winter storm moved through the Mid-Atlantic and Northeast regions late last month and, according to the Los Angeles Times, the spending uptick over the past two months could signal that consumers are ready to open their wallets after not splurging in the months leading up to Christmas.

The Fed raised its short-term interest rate in December, the first increase in almost a decade.