U.S. January core retail sales unchanged; December revised down
By Lucia Mutikani
WASHINGTON (Reuters) - U.S. consumer spending appears to have slowed further in January, with sales at clothing stores declining by the most since 2009, which could raise concerns about the economy's ability to continue expanding at a moderate pace.
The mixed retail sales report from the Commerce Department on Friday also showed purchases by households were not as strong as initially reported in December.
Fed Chair Jerome Powell told lawmakers this week that the "economy is in a very good place, performing well." The U.S. central bank last month left interest rates steady. The Fed is widely expected to keep monetary policy on hold this year after it reduced borrowing costs three times in 2019.
Retail sales excluding automobiles, gasoline, building materials and food services were unchanged last month. Data for December was revised down to show the so-called core retail sales rising 0.2% instead of jumping 0.5% as previously reported. Core retail sales correspond most closely with the consumer spending component of gross domestic product.
Consumer spending accounts for more than two-thirds of U.S. economic activity. Economists polled by Reuters had forecast core retail sales rising 0.3% last month. The unchanged reading in core retail sales suggested consumer spending lost further momentum early in the first quarter after losing considerable speed in the October to December quarter.
The economy grew 2.3% in 2019, slowing from 2.9% in 2018.
With business investment continuing to falter and manufacturing depressed, consumer spending had helped to keep the longest economic expansion on record, now in its 11th year, on track.
Despite signs of continued slowdown, consumer spending remains supported by a strong labor market, which is steadily lifting wages.
U.S. stocks index future pared gains after the data. The dollar was little changed and U.S. Treasury prices were steady.
In January, overall retail sales rose 0.3%, but data for December was revised down to show sales gaining 0.2% instead of climbing 0.3% as previously reported.
Sales were lifted by a auto purchases, which rebounded 0.2% after slumping 1.7% in December. Receipts at service stations fell 0.5%. Sales at electronics and appliance stores decreased 0.5%. Sales at building material stores jumped 2.1%, the most since last August, after rising 1.3% in December. Sales were likely boosted by unseasonably mild weather, which has boosted activity in the construction sector.
Receipts at clothing stores dropped 3.1% last month, the most since March 2009. Clothing retailers have been struggling with plummeting mall traffic as consumers opt for online shopping. Macy's announced this month plans to close 125 of its least productive stores over the next three years and cut more than 2,000 corporate jobs.
Online and mail-order retail sales rose 0.3%. That followed a 0.1% dip in December. Receipts at furniture stores rose 0.6%. Sales at restaurants and bars increased 1.2%. Spending at hobby, musical instrument and book stores edged up 0.1%.