Summary: US retail sales up 3.8% in January; rise greater than 1.8% gain expected; Omicron wave “no fear for consumers”; evidence points “to strong underlying demand conditions, inflation”; rises in eight of twelve retail categories; “non-store” segment” the largest single influence, rises 14.3%.
US retail sales had been trending up since late 2015 but, commencing in late 2018, a series of weak or negative monthly results led to a drop-off in the annual growth rate below 2.0%. Growth rates then increased in trend terms through 2019 and into early 2020 until pandemic restrictions sent it into negative territory. A “v-shaped” recovery then took place which was followed by some short-term spikes as federal stimulus payments hit US households in the first and second quarters of 2021.
According to the latest “advance” sales numbers released by the US Census Bureau, total retail sales increased by 3.8% in January. The rise was greater than the 1.8% gain which had been generally expected and in contrast to December’s -2.5% after it was revised down from -1.9%. On an annual basis, the growth rate slowed from December’s revised figure of 16.7% to 13.0%.
“Certainly, the Omicron wave which the US was in the midst of last month, held no fear for consumers,” said NAB Head of FX Strategy within its FICC division. However, he also noted the influence of seasonal adjustments on the figures, “with traditionally strong December sales pulled forward into November and January benefiting more than it has historically from start of year sales.”
The figures were released at about the same time as January’s industrial production figures and US Treasury bond yields moved lower on the day, especially at the short-end. By the close of business, the 2-year Treasury yield had shed 7bps to 1.51%, the 10-year yield had lost 3bps to 2.03% while the 30-year yield finished 4bps lower at 2.33%.
ANZ economist John Bromhead said the report was “best looked at on a two-month comparison because of Omicron distortions.” However, he still noted “all the evidence is pointing to strong underlying demand conditions and inflation.”
Eight of the twelve categories recorded higher sales over the month. The “Non-store retailers” segment provided the largest single influence on the overall result, rising by 14.3% for the month and 8.4% for the year to January.
The non-store segment includes vending machine sales, door-to-door sales and mail-order sales but nowadays this segment has become dominated by online sales. It now accounts for a little over 14% of all US retail sales and it has become the second largest segment after the vehicles and parts segment.