US retail sales rise most in 10 months in broad-based rebound

[WASHINGTON] US retail sales rebounded by more than forecast with the biggest gain since March, as Americans kept spending through a Covid-19 spike and hot inflation to help drive the economic recovery.

The value of overall purchases rose 3.8 per cent in January after a downwardly revised 2.5 per cent drop in the prior month, Commerce Department figures showed Wednesday. The figures aren't adjusted for inflation.

The median estimate in a Bloomberg survey called for a 2 per cent advance in overall retail sales from the prior month.

The broad-based advance in sales underscores the resiliency of Americans' demand for merchandise. While the Omicron variant and related surge in Covid-19 infections likely dampened services spending in the month, an improving labour market has helped consumers continue to spend on things like cars and furniture despite decades-high inflation and a collapse in confidence.

Eight of the 13 retail categories rose in the month. Sales at non-store retailers surged 14.5 per cent after plummeting in December. Motor vehicle sales rose 5.7 per cent following a decline in the prior month. Home furnishing stores also posted a solid sales advance.

Receipts at restaurants and bars, the report's only services-oriented category, fell 0.9 per cent, likely reflecting the record surge in Covid-19 cases seen in January. Data on inflation-adjusted personal spending and overall services spending will be out next week, offering a fuller picture of consumer outlays in the month.

On top of omicron and inflation, the expiration of monthly child tax credit payments - a programme that gave millions of families up to US$300 per child each month - may also weigh on consumer spending in the near-term. Before the report, economists were projecting US economic growth to slow to a 1.7 per cent annualised pace in the first quarter, a sharp deceleration from the 6.9 per cent seen in the final three months of 2021.

Excluding motor vehicles, retail sales rose 3.3 per cent, topping all expectations. So-called control group sales - which are used to calculate gross domestic product and exclude food services, auto dealers, building materials stores and gasoline stations - increased 4.8 per cent, also the strongest since March. BLOOMBERG