Data from the United States Department of Commerce and the National Retail Federation (NRF) today showed that January retail sales were up compared to December as well as on an annual basis.
Commerce reported that January retail sales at $416.6 billion were up 0.1 percent compared to December and up 4.4 percent compared to January 2012. Total sales for the November through January period were up 4.5 percent annually.
And NRF reported that January retail sales, which exclude autos, gas stations, and restaurants, were up 0.3 percent on a seasonally-adjusted basis from December and up 5.4 percent on an unadjusted basis annually. NRF officials said that January sales were up slightly as consumers adjusted their spending due to the increase in payroll taxes from the Fiscal Cliff negotiations and increases in fuel and energy prices, too.
“With the return of healthy housing prices, stronger employment statistics combined with historic highs on Wall Street at the end of 2012 and 2013, consumers seem a bit more confident these days,” NRF Chief Economist Jack Kleinhenz said. “Even though retail sales were relatively modest in January, consumers seem to have adjusted accordingly to rising taxes and energy prices. Far from secure, consumer confidence continues to be shaky.”
Even with relatively low expectations for the economy early into the New Year, there are some positive signs in the mix as well, including a slightly declining unemployment rate, improving consumer confidence data, as well as encouraging automotive sales and housing data.
But at the same time these things need to be viewed with a certain degree of caution, too, in the light of overall weak GDP growth and declining manufacturing output in recent months.
As many economists continue to point out, higher job growth levels have the potential to boost retail sales—and overall—economic growth. But even with employment data showing some gains, it is still not yet occurring at a rate that has a meaningful impact on retail sales growth.
As previously reported, retail sales largely show slow and incremental growth, while continued growth is needed over a longer period, as consumer spending accounts for roughly 70 percent of U.S. economic activity. And while retail growth is relatively slow still, signals remain intact that the economy is showing some signs of recovery, with consumer confidence on the upswing to a large degree declines in gasoline prices over the last two months.
The continuing trend of slight or flattish 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.
“I think there is a heavy dose of caution being exercised throughout corporate America and supply chains,” said Mike Regan, president and chairman of TranzAct Technologies in a recent interview. “Every company is managing its business in terms of using extreme caution. As the retail sales numbers relate to freight, I think the market is fairly balanced right now in that there are some carriers with some capacity and reasonable rates. But if there was any type of economic expansion, rates could go up significantly.”
A tepid economic outlook is not entirely surprising, given how the pace of the recovery has been sluggish. And it is weighing on corporate entities, too.
A recent Wall Street Journal report noted that many U.S. companies’ executives are less optimistic about the global economy and their own prospects, and many are lowering financial forecasts. The article stated that many executives are worried about hesitant U.S. customers, chilled by continued Washington gridlock.
