U.S. retail sales rebounded sharply in January amid a surge in purchases of motor vehicles and other goods.However higher prices could dampen economic growth this quarter.
Retail sales jumped 3.8% last month as reported by the Commerce Department on Wednesday. Data for December was revised with sales declining 2.5% instead of 1.9% as previously reported.
Economists on the other hand expect retail sales to rise 2.0%. Motor vehicle sales typically decline in January after the promotional season. Yet monthly applications are not as large as in previous years and are less frequent due to lack of supply.
Excluding cars, petrol, building materials and food services, retail sales jumped 4.8% in January. Data for December was revised lower showing these core retail sales fell 4.0% instead of 3.1% as previously reported.
With higher prices contributing part of the increase in sales, inflation -adjusted core retail sales may be weaker.Real core retail sales are an important factor in measuring consumer spending growth. Real consumer spending declined 1.0% in December.
Economic growth estimates for the first quarter are mostly below the annual rate of 2%. The economy grew at a rate of 6.9% in the fourth quarter. Growth in 2021 is the strongest since 1984.
The US dollar index, which measures the US dollar against six major currencies, traded down 0.18% at 95.825. The movement of the US dollar is also influenced by geopolitical sentiment where Russia has begun to dance back some of their military forces.
