US retail sales jump past forecasts in January

Americans splashed out with abandon at the start of the year.

According to the US Department of Commerce, in seasonally adjusted terms, retail sales volumes jumped at a month-on-month pace of 3.8% in January to reach $649.8bn.

Economists had penciled-in an increase of 1.8%.

Sales of motor vehicles and parts dealers were 5.7% stronger, those of furniture and home furnishing stores by 7.2% and those of building materials by 4.1%.

General merchandise stores clocked in with growth of 3.6% while non-store retailers saw sales surge by 14.5%.

The prior month's estimate for total retail sales was revised lower from a preliminary reading of -1.9% month-on-month to -2.5%.

In comparison to the same month one year before, retail sales grew by 13.0%.

Commenting on the latest retail sales numbers, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said he was now less downbeat on prospects for growth in the first quarter.

He estimated that household consumption was now on course to grow at a quarterly annualised pace of around 5.0% so that gross domestic product would expand by about 4.0%, twice his previous expectation.

"The strength of this rebound adds credence to the idea that December sales were weak largely because people pulled holiday purchases forward, fearing shortages of popular items. Sales then mean-reverted in January, despite the Omicron Covid wave peaking in the middle of the month.

"[...] The range of uncertainty is still massive at this point in the quarter, but our initial fears of very slow growth in the face of the Omicron wave are now much diminished."