January retail sales start 2021 off strongly, reports Commerce and NRF

Buoyed by COVID-19-focused government stimulus checks, United States retail sales saw sequential increases for the first time in three months, in January, according to data issued today by the United States Department of Commerce’s U.S. Census Bureau and the National Retail Federation (NRF).  

Commerce reported that January retail sales—at $568.2 billion—were up 5.3% compared to December and were up 7.4% annually. And it added that total retail sales, from November 2020 through January 2021, were up 4.6% compared to the same timeframe a year ago.

January retail trade sales increased 5.1% compared to December and 10.8% annually, while non-store retailers—including e-commerce sales, which have seen significant growth over the course of the ongoing pandemic—saw a 28.7% annual increase, while sporting goods, hobby, musical instrument, and book stores rose 22.5%.  

The NRF reported that its calculation of January retail sales, which excludes automobile dealers, gasoline stations, and restaurants, pointed to a 5.9% gain, for the month, on a seasonally-adjusted basis compared to December and were up 10.7% annually on an unadjusted basis, which both respectively outpaced December’s 2.2% sequential decline and 7.9% annual gain. And it added that on a three-month moving average through January retail sales were up 8.7% annually on an unadjusted basis.

“We expected retail spending to ramp up in January thanks to the latest round of stimulus checks and better covid trends, and it clearly did,” NRF Chief Economist Jack Kleinhenz said in a statement. “There was none of the falloff in spending that we often find post-holiday and the increase was even better than expected. There is plenty of purchasing power available for most consumers, and the pickup in shopping has even been reflected in the number of hours worked by retail employees. Confidence is building thanks to the availability of COVID-19 vaccines and states and local governments are beginning to remove restrictions on economic activity. Going forward, I expect consumer spending to build on this momentum.”

NRF officials noted that the increase in January retail sales built off of the strong momentum over the course of the November-December period, which it defines as the holiday shopping season, and saw an 8% increase, to a record tally of $787.1 billion.

Some of the key retail sales sector data for January cited by the NRF included:

• Online and other non-store sales were up 11% month-over-month seasonally adjusted and up 22.1% unadjusted year-over-year;
• Sporting goods stores were up 8% month-over-month seasonally adjusted and up 22% unadjusted year-over-year;
• Building materials and garden supply stores were up 4.6% month-over-month seasonally adjusted and up 13.7% unadjusted year-over-year;
• Grocery and beverage stores were up 2.4% month-over-month seasonally adjusted and up 11.6% unadjusted year-over-year; and
• Furniture and home furnishings stores were up 12% month-over-month seasonally adjusted and up 9.3% unadjusted year-over-year

In a research note, Neil Saunders, Managing Director of GlobalData, observed that the new round of stimulus payments, which started to be delivered at the back end of 2020, continued to reach households in January and helped to boost spending among lower- and middle-income consumers.

“This was a shot in the arm for the retail sector and, by our estimates, pushed up spending growth by almost two percentage points,” wrote Saunders.

Looking ahead, Saunders explained that the outlook for the year ahead is complex.

“From a demand perspective, there is enough firepower in the economy to maintain good growth through the next couple of months,” he noted. “However, stellar growth will rely on more stimulus being passed. Come March the numbers will start to lap unusual prior year comparatives. This means sectors that were down strongly, such as apparel, will start to post strong growth rates. On the flip side, sectors that grew strongly, like grocery, will post weak growth or declines. All in all, however, 2021 will not be a bad year for retail.”