US January retail sales rise 0.4%, signal improving confidence

14 February 2012 17:45  [Source: ICIS news]

WASHINGTON (ICIS)--US retail sales reached $401.4bn (€305bn) in January, the Commerce Department said on Tuesday, a gain of 0.4% from December and an indication of improving consumer confidence.

In its monthly report, the department said that January’s retail sales were also 5.8% stronger than in January 2011.

The National Retail Federation (NRF) said that the 0.4% gain in January was particularly significant because consumer spending typically slows in the month following December's high-paced Christmas holiday shopping season.

“As a traditionally slower sales month for the retail industry, it’s encouraging to see such sustained growth in consumer spending and sentiment,” said NRF president Matthew Shay.

Consumer spending is the principal driving force of the US economy, accounting for as much as 70% of all production and commercial activity.

Shay noted that with data on sales of automobiles, gasoline and restaurants backed out of the overall total, the so-called core retail sales pace showed an even stronger advance of 0.9% in January.

NRF chief economist Jack Kleinhenz said that the better than expected advance in retail sales last month could be attributed to “a slightly improving labour market with gains in payrolls that have lifted consumer confidence in January”.

However, he cautioned, “consumer spending alone will not be enough to sustain economic growth or provide a strong foundation for consistent retail sales and growth”.

“We must see improvements in key economic indicators, such as housing and employment,” he said.

The US housing sector remains depressed, and while the US jobless rate has fallen to 8.3%, it is still well above of what economists consider normal unemployment of around 4-5%.

($1 = €0.76)

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