US Retail Sales Drop by Most in Nearly a Year After Holidays

US retail sales broadly declined in January, indicating consumers took a breather after a strong holiday shopping season.

The value of retail purchases, unadjusted for inflation, decreased 0.8% from December after a downward revision to the prior month, Commerce Department data showed Thursday. The drop was the biggest in nearly a year.

US Retail Sales Fall by Most in Nearly a Year

Separate data showed US factory production fell for the first time in three months in January. The two reports pointed to a loss of momentum last month, but they’re not necessarily a sign of significant deterioration in the economy.

So far, a robust labor market and easing inflation have allowed consumers to keep spending. Recent manufacturing surveys suggest the worst of the slump is over in the sector and homebuilder sentiment rose to a six-month high this month.

“Even as we expect spending will moderate this year, the January slowdown may overstate the near-term pull back in consumption,” Wells Fargo & Co economists Tim Quinlan and Shannon Seery Grein wrote in a note. “A still-sturdy labor market should lead to only a gradual moderation, rather than collapse in spending this year.”

Metric Actual Estimate
Retail sales (MoM) -0.8% -0.2%
Sales ex. autos (MoM) -0.6% +0.2%
‘Control group’ sales (MoM) -0.4% +0.2%