US consumers kicked off 2020 in a steady fashion, with headline retail sales rising slightly, although underlying measures of discretionary spending stalled and growth in previous months was revised lower.
Headline retail sales rose 0.3 per cent month on month in at the start of 2020, versus a downwardly revised 0.2 per cent (previously 0.3 per cent) in December, the Commerce Department revealed on Friday. That matched the median forecast for 0.3 per cent, according to a survey of economists by Refinitiv.
The headline sales numbers were supported by a rise in auto sales, and unseasonably mild weather in January helped prop up building materials sales.
Sales measures stripping out volatile items painted a more disappointing picture. Control sales, which exclude items like autos, petrol and building materials, were flat in January, weakening from a December increase that was revised lower to 0.2 per cent — the quickest since August — from 0.5 per cent. Economists expected a 0.3 per cent increase.
Clothing sales were a weak spot in the control group, likely weighed down by the mild January weather, but consumers also cut back spending on electronics and health & personal care products.
“The unexpected weakness in underlying retail sales in January suggests that consumer spending is still struggling for momentum but, with jobs growth solid and consumer confidence resilient, we doubt this weakness will persist,” Andrew Hunter, senior US economist at Capital Economics, said.
Economists at Oxford Economics said: “Looking ahead, the impact of the coronavirus outbreak on the global economy and global financial markets may constrain consumer outlays. And, with wage growth firmly anchored around 3% and employment growth cooling, consumer spending will continue to gradually cool this year.”
A number of higher-end retailers including Ralph Lauren, Canada Goose and Moncler have in the past week said they expect sales, particularly in Asia, are likely to suffer as a result of the outbreak, while companies ranging from Apple to Starbucks have temporarily closed many of their stores in China.
