January Retail Sales

The Census Bureau’s Retail Sales figure improved in January.  The 0.4 percent headline figure is weaker than expected but came as a relief after the zero growth of December.  Keeping the headline from a better reading, automobiles sales fell 1.1 percent after surging in the final month of the year.  The car figures are getting scrutinized as the information does not reconcile with the figures from auto dealers put out earlier in the month.  Gasoline sales managed a 1.4 percent gain after a drop in the month before, but evidence suggests this is due more to price hikes than usage.

Year-over-year retail sales figures declined from the previous reading.  From December 2010 to December 2011, retail sales grew by 6.2 percent, but the twelve months ending in January 2012 slowed to 5.8 percent annual growth.  Non-store retailers influenced this change, seeing sales slow from 10.1 percent growth rate year-over-year in December to 4.9 percent in January.  Clothing and hobby spending were both down during the same period as well.  Gasoline managed to grow at the same pace.

This indicator is notorious for large revisions and based on the automobile sales discrepancy, there is a good chance we see this number improve when it gets recounted.   For now, it must be concluded that the report is rather good for first quarter GDP because the automobile portion of retail sales is excluded in the country’s output calculation and is replaced by the car industry’s sales figures.  (by C. Cox)