U.S. retail sales rose more than expected in January as households bought electronics and a range of other goods, pointing to sustained domestic demand that should bolster economic growth in the first quarter.
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The Commerce Department said on Wednesday retail sales
increased 0.4 percent last month. December’s retail sales were
revised up to show a 1.0 percent rise instead of the previously
reported 0.6 percent advance.
Last month’s fairly upbeat sales came despite motor vehicle
purchases recording their biggest drop in 10 months. Compared to January last year retail sales were up 5.6 percent.
Excluding automobiles, gasoline, building materials and food
services, retail sales increased 0.4 percent after an upwardly
revised 0.4 percent gain in December. These so-called core
retail sales correspond most closely with the consumer spending
component of gross domestic product.
Economists polled by Reuters had forecast retail sales
ticking up 0.1 percent and core sales gaining 0.3 percent
last month. January’s fairly solid retail sales supported views
that economic growth will accelerate in the first quarter.
The economy grew at a 1.9 percent annualized rate in the
fourth quarter.
Consumer spending is being supported by a tightening labor
market, which is gradually boosting wage growth. That in turn is
underpinning economic growth, paving the way for at least two
interest rate increases from the Federal Reserve this year.
Fed Chair Janet Yellen told lawmakers on Tuesday that
"waiting too long to remove accommodation would be unwise."
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The U.S. central bank has forecast three rate increases this year.
The Fed hiked its overnight interest rate last December by 25
basis points to a range of 0.50 percent to 0.75 percent.
Last month, sales at electronics and appliances stores
jumped 1.6 percent, the biggest rise since June 2015, after
falling 1.1 percent in December. Receipts at building material
stores increased 0.3 percent.
Sales at clothing stores jumped 1.0 percent, the largest
rise in nearly a year. Department store sales climbed 1.2
percent, the biggest increase since December 2015.
Department store sales have been undercut by online
retailers, led by Amazon.com <AMZN.O>.
That has led to some retailers, including Macy’s <M.N>, Sears <SHLD.O> and Abercrombie & Fitch <ANF.N> announcing shop closures.
Sales at online retailers were unchanged last month after
soaring 1.9 percent in December. Receipts at restaurants and
bars rose 1.4 percent, while sales at sporting goods and hobby
stores shot up 1.8 percent. Receipts at auto dealerships,
however, fell 1.4 percent after vaulting 3.2 percent in
December. Last month’s drop was the biggest since March 2016.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
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