WASHINGTON: US retailers more than regained ground lost in an unexpected December slump, with a surprise boom in January sales, according to government data released yesterday. Retail sales rose 3.8 percent last month, the Commerce Department said, double what was expected and a dramatic reversal of the 2.5 percent decline in December, which was worse than originally reported.
"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,” Ian Shepherdson of Pantheon Macroeconomics said. He said the report points to better-than-expected GDP growth in the first quarter.
The auto industry, which continues to face lean inventories due to the global semiconductor shortage that has cut into production, bounced back last month with a 5.7 percent jump in sales of motor vehicles and parts, according to the Commerce Department.
Nonstore retailers encompassing e-commerce firms saw sales soar 14.5 percent, while furniture and home stores reported a 7.2 percent increase, and sales at department stores rose 9.2 percent, the report said. Building materials and garden equipment dealers saw a 4.1 increase in sales, and electronics and appliance business increased 1.9 percent. Gas stations were among the few sectors that reported a decline in sales in January, with a 1.3 percent fall. Sporting goods stores saw a three percent decrease, while bars and restaurants and health and personal care stores suffered dips of under one percent.
Meanwhile, US industrial production grew more than expected in January, the Federal Reserve reported yesterday, amid a surge in heating demand and strong mining activity. The 1.4 percent increase last month came after a slight decline in December, and was helped by a 9.9 percent surge in the utilities index as weather grew colder across the United States, the largest-ever jump in its history.
Mining saw a one percent increase that was in large part due to a 6.2 percent rise in oil and gas drilling, though it remains below its pre-pandemic level, according to the Fed. Manufacturing output was up a more modest 0.2 percent amid growth in most manufacturing sectors, though motor vehicles and parts production declined as automakers struggled to find semiconductors, as did coal and petroleum products. Oren Klachkin of Oxford Economics predicted a "solid year” ahead for industrial production, as manufacturers see continued demand and oil and gas producers benefit from higher prices.
"The biggest question facing the industrial sector is how quickly will supply chain and hiring headwinds dissipate,” he wrote in an analysis. "We expect these challenges to diminish slowly as the economy learns to live with COVID. However, even if the virus disappeared overnight, it would take a while for supply chains to completely heal.” —AFP