2022 gets off to a strong start as U.S. retail sales ride out January headwinds
Overall, U.S. retail sales in January were up 3.8% seasonally adjusted from December and 13% year-over-year, according to U.S. Census Bureau data. By comparison, December sales were down 2.5% from November, but up 16.7% year-over-year.
Despite occasional month-over-month declines, sales have increased year-over-year in every month since June 2020, according to census data.
Apparel sales rose 0.7% month-on-month in January and 21.9% from the same period a year ago.
National Retail Federation (NRF) President and CEO Matthew Shay notes that January figures show 2022 is off to a very strong start for consumers and retailers, especially on the heels of a record holiday season. and record sales in 2021.
“As the year ahead will face challenges related to inflationary pressures, labor shortages, the impacts of Covid-19 and uncertainty related to international tensions in Russia and China, the figures today show that despite these concerns, consumers are spending and the economy remains in good shape. We are confident that retail sales growth and the overall financial health of consumers can continue, and the current pressures on the The economy should be subdued if the political pressures of the election year do not translate into policy decisions that compound the challenges our economy already faces.
NRF Chief Economist Jack Kleinhenz adds, “January sales overcame major headwinds that make the results all the more impressive. A triad of forces weighed on consumer behavior and spending as the weather hit much of the United States, the Omicron variant was relentless, and inflation rose. Additionally, the Enhanced Child Care Tax Credit ended at the end of 2021, affecting millions of families. Despite all this, consumers increased their spending even after a record holiday season. »
NRF’s retail sales calculation – which excludes car dealerships, gas stations and restaurants to focus on core retail – showed January was up 4.7% seasonally adjusted from December and up 8.5% unadjusted year-over-year. In December, sales fell 3.6% month over month, but rose 13% year over year. NRF’s numbers rose 12.5% unadjusted year-over-year on a three-month moving average in January.
The January results follow a 14.1% year-over-year increase in retail sales as calculated by NRF during the November-December 2021 holiday season. The growth rate and the 886 $.7 billion spent during the holidays was new highs despite the pandemic and other factors.
January sales rose in all but two categories on a monthly and annual basis, with year-over-year gains led by clothing and building supply stores and online sales.
Clothing and clothing accessories stores rose 0.7% seasonally adjusted and 19.1% unadjusted year over year, according to NRF figures.
Online and other non-store sales increased 14.5% seasonally adjusted month-over-month and 8.9% unadjusted year-over-year.
Growth is robust, but trending downward
Neil Saunders, managing director of GlobalData, notes that January’s retail sales were robust and show the consumer continues to defy gloomy economic headlines.
“Nevertheless, growth has trended lower compared to the last ten months and inflation is now playing a much bigger role in driving the numbers up. the headlines suggest. The key is how it evolves – and on that front there are more downsides than upsides,” he says.
“The retail sector started the year on a high note, with January sales up 12.3% over the previous year. Although very robust, the numbers are not as bright as they might seem at first glance. First, this is the slowest pace of growth since February 2021 and represents a reasonable decline from the 16.6% rise recorded in December. Second, we believe that about 6.9 percentage points of this increase is due to inflation. So while the volumes are positive, they are less impressive than the overall figure would initially suggest.
“Nevertheless, despite the headwind of inflation and other economic concerns, the consumer is still out spending in effect. One of the reasons for this is that there is always a net shift of expenditure from services to products. Vacations, entertainment and leisure are still not completely back to normal, and many households continue to indulge themselves by purchasing products instead of these things. The other reason is that although people are increasingly concerned about rising prices, it takes time for the reality of inflation to catch up with household finances. Although some low-income cohorts are now having to make tough choices about what to buy, many others are not yet on the verge of radically changing their spending habits.
Saunders adds, however, that unfortunately, if inflation persists and interest rates rise, GlobalData believes that reality will start to bite later in 2022. “In that sense, retail is likely currently living on borrowed time. “, he warns.
Core retail spending – which excludes gasoline, motor vehicles and restaurants – rose 8.5% year over year.
Saunders said: “Once again, this is a solid result, but much more modest than the meteoric growth of the last ten months. Behind this figure, interesting differences are now emerging depending on the sector.
“Apparel continues to do well, with stores recording an exceptional 19.1% rise, albeit compared to a weaker result the previous year. Inflation played a role here as with less discounting , prices are on the rise.However, so is the ongoing ‘closet reset’ as consumers splashed out with new products for the upcoming season.
“Finally, off-store sales provide a point of interest. After two months of very high penetration of over 16% of all retail, levels have reset to a more modest 14.7%. Not only does this show that consumers are returning to physical stores, but it also demonstrates that the oft-held view that digital penetration rates will rise inexorably is demonstrably wrong.