Retail sales unexpectedly rebound in January, rising +.3% MoM, when a decline of -.3% MoM was expected. This followed a -.4% MoM decline in December. Excluding autos, sales were also stronger than expected at +.3% MoM (consensus+.2%). Consumer spending is very important to the US economy because it represents about two-thirds of total GDP, and slowing job growth was expected to reduce spending. Today's data is a surprise based on the weak sales data reported by discount and department stores, as well as other retailers. The International Council of Shopping Centers had indicated that the +.5% YoY growth in January, for stores open at least a year, was the worst since 1970.
Auto sales showed a surprising recovery in January to increase +.6% MoM in January after falling -1.1% MoM in December. Manufacturers data showed sales declining a large -6.7% MoM in January versus December. Most forecasters are expecting auto sales to decline to a ten year low in 2008. Another surprise was the 2% MoM rise in service station sales. Excluding gasoline, retail sales rose +.1% MoM in January. Clothing sales rose +1.4% MoM and food sales rose +.6% MoM. Catalog and internet sales increased by +.5% MoM.
In contrast, department store sales eased by -1.1% MoM while building material sales fell -1.7% MoM. Sales also declined for electronics (-1% MoM), appliances. and sporting goods (-1.3% MoM) in January.
Consumers now spend more on debt service, housing, medical, food and energy, as a percentage of total spending, than at anytime since records began in 1980. That percentage has risen to 66.9%.
Year-over-year, retail sales are up 3.8%, with gasoline sales up 23% YoY.
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