January Retail Sales Saw Biggest Decline in 11 Months

(CN) – Retail sales fell sharply in January, seeing their biggest drop since February 2017, the Commerce Department said Wednesday.

The government said retail sales decreased 0.3 percent last month, with the biggest declines occurring in auto showrooms and in stores selling building materials.

Data for December was revised to show sales unchanged instead of rising 0.4 percent as previously reported.

Auto sales fell 1.3 percent in January, the biggest monthly drop since August, and came on the heels of a smaller 0.1 percent setback in December.

Department store sales rose a solid 0.8 percent while a broader category that includes big box retail stores such as Walmart, rose a smaller 0.2 percent.

The booming internet shopping sector was flat in January, but is still 10.2 percent higher than a year ago.

Sales at gasoline service stations rose 1.6 percent, but that’s partly due to rising pump prices.

The slowdown comes after a three-month stretch of robust consumer activity, from September through November, which had fueled the best holiday sales recorded in a decade.

Economists Wednesday said they were not too concerned about the report for January, saying they continue to expect solid gains in coming months, as long as the recent stock market turmoil does not undermine consumer confidence.

Andrew Hunter, U.S. economist for Capital Economics, told the Associated Press that some of the weakness in January retail sales could be linked to the unusually high number of reported flu cases last month.

Nevertheless, he conceded a drop in sales was probably inevitable after their recent strength.

“With jobs growth still strong, consumer confidence at an unusually high level and the recent tax cuts providing a one-off boost to disposable incomes this month, the near-term prospects for consumer spending remain fairly bright,” Hunter told the AP.

Economists are forecasting that the overall economy, as measured by the gross domestic product, will expand at a solid 3 percent rate in the current quarter. It grew at a solid 2.6 percent annual rate in the final three months of last year.

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