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US retail sales data reflects US recovery

The Commerce Department said on Friday total retail sales increased 0.5 percent. In addition, December and November were both revised to show stronger spending. December sales were revised to down only 0.1 percent, compared with the previously reported fall of 0.3 percent, while November sales were revised to up 2 percent from up 1.8 percent.

Analysts polled by Reuters had forecast retail sales increasing 0.3 percent last month. Compared to January last year, sales were up 4.7 percent.

“This is obviously a nice number and a sign of continuing improvement in the economy. We’ve had a few signs of that,” said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.

U.S. stock index futures were little moved by the data, holding at weaker levels as investors worried that China’s surprise move to raise bank reserve requirements could hurt global recovery. The U.S. dollar extended gains against the yen, while Treasury debt prices were little changed.

Retail sales are being closely watched for signs whether consumers are healthy enough to sustain the economy’s recovery once government stimulus and the boost from restocking by businesses wanes.

The economy grew at a 5.7 percent annual rate in the fourth quarter, the fastest clip in six years. High unemployment has sapped consumers’ appetite for shopping, but improving labor market conditions may support future sales and help to nurse the broader economic recovery.

Motor vehicle and parts purchases were flat last month, after rising 0.1 percent in December.

Excluding motor vehicles and parts, retail sales rose 0.6 percent in January after slipping 0.2 percent the prior month. Economists had expected a 0.5 percent gain. Sales were boosted by electronics and appliance stores, where sales rose 1.2 percent after declining 3.5 percent in December. Sporting goods, hobby and books sales rose 1 percent last month, adding to December’s 1.9 percent increase.

Sales at general merchandise stores rose 1.5 percent in January, the biggest gain since February 2009.

Core retail sales, which exclude autos, gasoline and building materials, rose 0.8 percent after falling 0.3 percent in December. Core sales correspond most closely with the consumer spending component of the government’s GDP accounts.