U.S. retail sales rebound in January

U.S. retail sales rose modestly in January after a December drop, according to a report from the U.S. Department of Commerce. January retail sales reached $504.4 billion on a seasonally adjusted basis, a 0.2 percent increase over the month prior. Excluding spending on motor vehicles and at gas stations — businesses that have been affected by rising gas prices — sales increased 1.2 percent from December, the largest monthly gain since May 2018.

January’s increase in retail sales recouped only a fraction of December’s plunge, leaving expectations for a slowdown in consumer spending in the first quarter intact, reported Rueters.

Since January 2018, spending on categories excluding motor vehicle–related sales has increased a robust 3.7 percent, with the biggest gains concentrated in building materials stores, restaurants, grocery stores and non-store retailers. The latter industry, which includes e-commerce retailers, saw a 7.3 percent increase in spending over the same month last year.

January sales in clothing and accessories stores reached $22.6 million, a 1.6 percent increase over the year prior, although a 1.3 percent drop from December. However, department store sales fell 3 percent since January 2018 and remained mostly flat during the first month of the year.

Recently, U.S. retailers had announced 4,810 store closures in 2019, according to retail and technology advisory Coresight Research, more than double the number announced during the same period last year. Last year, Coresight tracked 5,524 store closures, down more than 30 percent from a record 8,139 closures announced in 2017.

Abercrombie & Fitch, Charlotte Russe, Chico’s, Gap, Gymboree, Family Dollar, J.C. Penney, Payless ShoeSource, and Victoria’s Secret all announced store closures. Tesla recently retracted its plan to close all of its retail stores. Around half of the stores Tesla planned to close will remain open, and the carmaker will increase prices on its higher-end Model 3, Model S and Model X “by about 3 percent on average worldwide.” Tesla will also keep 20 percent of its stores under review for a few months.

The National Retail Federation forecasts overall sales growth of between 3.8 percent and 4.4 percent during 2019, for a total of about $3.8 trillion.

Consumer sentiment continued to increase in fourth quarter and outperformed the 10-year average, said CBRE. However, it fell in early January to a two-year low, which the University of Michigan attributed to a number of economic headwinds, including tariffs, stock market volatility, the global economic slowdown, the partial U.S. government shutdown and lack of clarity about monetary policies.

Driven by low unemployment and tax cuts, continued healthy growth in wages and spending is expected in 2019, predicted CBRE.