Retail sales start the year with growth

Retail sales numbers saw modest gains to begin the New Year, according to data issued by the United States Department of Commerce and the National Retail Federation.

Commerce reported that January retail sales were up 0.2 percent compared to December and up 3.7 percent annually at $449.9 billion. Total retail sales from November 2015 through January 2016 were up 2.5 percent.

The NRF reported that January retail sales, which exclude automobiles, gas stations, and restaurants, rose 0.6 percent over December and 1.4 percent compared to January 2015.

“January’s rebound represents the recent solid labor market performance, low energy savings, and elevated savings rate that are key determinants of household spending and continue to support economic growth offsetting the industrial sector’s various challenges,” said NRF Chief Economist Jack Kleinhenz in an NRF blog posting.

Earlier this week, the NRF said it is calling for 2016 retail industry sales, excluding automobiles, gas stations, and restaurants, to see a 3.1 percent annual increase.
While this estimate comes in higher than the 10-year average of 2.7 percent, it falls short of the NRF’s 2015 estimate of 4.1 percent. The Washington, D.C.-based organization also said it expects non-store sales to grow between 6-9 percent in 2016.

The NRF offered up some other metrics that it maintains point to a strong 2016 on the retail sales front, including:
-2016 economic growth to be in the 1.9 percent-to-2.4 percent range; and
-an estimated 190,000 new jobs added per month, which is off from 2015 but consistent with a growing labor market

What’s more, the NRF said that more jobs equates into more income that means more retail spending. But it added that growth in spending is expected to come from jobs growth as opposed to higher wages.

Lindsey Piegza, chief economist at Stifel Fixed Income, said in a research note that “a stronger-than-expected improvement in retail spending at the start of the year, coupled with a sizable upward revision to purchases at the end of last year suggests household spending is on relatively firmer footing than previously thought.”