ALSO READJanet Yellen: Rate hikes needed if economy stays on course Gold steady above 4-week lows as dollar slips ahead of Janet Yellen's speech Sensex little changed ahead of Janet Yellen speech, August expiry 'High-pressure' policy only way back from crisis, says Janet Yellen Fed chair Janet Yellen says US has 'strongest job market' in decade
US retail sales rose more than expected in January as households bought electronics and a range of other goods, pointing to sustained domestic demand that should bolster economic growth in the first quarter.
The Commerce Department said on Wednesday retail sales increased 0.4 per cent last month. December's retail sales were revised up to show a 1.0 per cent rise instead of the previously reported 0.6 per cent advance.
Last month's fairly upbeat sales came despite motor vehicle purchases recording their biggest drop in 10 months. Compared to January last year retail sales were up 5.6 per cent.
Excluding automobiles, gasoline, building materials and food services, retail sales increased 0.4 per cent after an upwardly revised 0.4 per cent gain in December. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
Economists polled by Reuters had forecast retail sales ticking up 0.1 per cent and core sales gaining 0.3 per cent last month. January's fairly solid retail sales supported views that economic growth will accelerate in the first quarter.
The economy grew at a 1.9 per cent annualised rate in the fourth quarter.
Consumer spending is being supported by a tightening labor market, which is gradually boosting wage growth. That in turn is underpinning economic growth, paving the way for at least two interest rate increases from the Federal Reserve this year.
The Fed hiked its overnight interest rate last December by 25 basis points to a range of 0.50 per cent to 0.75 per cent.
Last month, sales at electronics and appliances stores jumped 1.6 per cent, the biggest rise since June 2015, after falling 1.1 per cent in December. Receipts at building material stores increased 0.3 per cent.
Sales at clothing stores jumped 1.0 per cent, the largest rise in nearly a year. Department store sales climbed 1.2 per cent, the biggest increase since December 2015.
Department store sales have been undercut by online retailers, led by Amazon.com. That has led to some retailers, including Macy's, Sears and Abercrombie & Fitch announcing shop closures.
Sales at online retailers were unchanged last month after soaring 1.9 per cent in December. Receipts at restaurants and bars rose 1.4 per cent, while sales at sporting goods and hobby stores shot up 1.8 per cent. Receipts at auto dealerships, however, fell 1.4 per cent after vaulting 3.2 per cent in December. Last month's drop was the biggest since March 2016.