US retail sales drop sharply at the start of the year

Americans reined in their spending unexpectedly at the start of 2024.

According to the Department of Commerce, in seasonally adjusted terms, retail sales volumes dropped at a month-on-month pace of 0.8% in January to reach $695.78bn.

That was on top of a two tenths of a percentage point downwards revision to the prior month's month-on-month gain to 0.4%.

Sales of building materials and garden equipment were especially weak, shrinking by 4.1% over the month, alongside a 1.7% in sales at motor vehicles and parts dealers.

The key non-store retailer category saw sales decline by 0.8%.

On the back of Thursday's data, Ian Shepherdson, chief economist at Pantheon Macroeconomics, told clients: "It is far too soon to say that consumer spending is now on course for a sharp slowdown in Q1, not least because the advance retail sales data are often revised substantially.

"But the strength of spending late last year always looked unsustainable, so some softening, at least, is a good bet."

-- More to follow --