Retail sales surged in January
U.S. retail sales surged by 3.8% m/m in January, nearly double the 2.0% rise that was expected by forecasters. KPMG Senior Economist Ken Kim provides his three takeaways from the January report.
KPMG Senior Economist Ken Kim provides his analysis of the January retail sales report.
January retail sales show 2022 is off to a strong start
To welcome 2022, consumers rang in the new year at the cash register. Retailers saw big gains in January, according to the latest data from the U.S. Commerce Department. Retail sales rose 3.8% month-over-month, nearly double the 2.0% rise expected by forecasters. Even better, the surge overturned the 2.5% sales drop reported in December 2021.
Shoppers spent broadly this month, with multiple retail sectors achieving the best results in nearly a year.
Percentagewise, online sales contributed the largest boost, rising a whopping 14.5% from the previous month. Non-store retailers were anxious to bounce back after the global supply chain crisis crushed holiday sales late in the season, and they did it with strength: The January increase more than made up for the category’s December’s 11.4% decline.
Households were also active in buying bigger-ticket items, despite the worst inflation in four decades. Sales of motor vehicles and parts increased by 5.7% in January, while two sectors tied to the housing—building materials (up 4.1 percent) and furniture (up 7.2%)—jumped to their best sales in 10 months.
Not over Omicron
Although retailers as a whole far exceeded sales expectations in January, the resurgent pandemic continues to impact spending in some categories.
In particular, the vast and rapid spread of the Omicron variant kept some consumers away from social activities, causing sales at restaurants and bars to decline for the second straight month. Sales dropped nearly 1% in January after falling by 0.6% in December.
Good things to come
When combined with solid January employment numbers, the reversal of retail fortunes suggests the U.S. economy is off to a strong start in 2022.