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United States Retail January 2024

United States: Retail sales contract at sharpest rate since March 2023 in January

Retail sales declined 0.8% in month-on-month seasonally adjusted terms in January, which followed December’s 0.4% increase and confounded market expectations of a 0.1% fall. January’s result marked the worst reading since March 2023, and was driven by a broad-based deterioration across subsectors.

On an annual basis, retail sales grew 0.6% in January, which was significantly below December’s 5.3% expansion and marked the worst result since May 2020. Moreover, the trend pointed down, with the annual average growth of retail sales coming in at 2.8%, down from December’s 3.4% reading.

January’s poor retail trade data chimes with our panelists’ forecasts for a slowdown in consumer spending growth in Q1 versus Q4. That said, poor weather across a significant part of the country likely depressed retail sales in January, suggesting sales are likely to rebound somewhat in the remainder of the quarter.

On the latest data and outlook, Desjardins’ Francis Généreux said:

“It seems that real consumer spending will grow more slowly in the first quarter of 2024. Is this our long-awaited sign that the US economy is weakening? It’s too soon to say. US consumer confidence has been rising since the fall, and the labour market continues to perform very well. At the same time, the weather was much worse in January than in December, which may have disrupted consumer spending for the month. We’ll need to see if a return to milder weather brings sales back to their previous upward trend—or if we’re witnessing the start of a more persistent downward trend, with consumers weighed down by high interest rates and dwindling savings.”

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