U.S. retail sales fell sharply last month, suggesting that broader economic weakness to start the year could offset the faster-than-expected January inflation report.
Headline retail sales fell 0.8% from December to a collective total of $700.3 billion, Commerce Department data indicated Thursday. That’s four times lower than economists’ forecasts of a 0.2% decline and the weakest since March of last year.
The December total was also revised lower, to 0.4% from an original reading of 0.6%.
The closely tracked control-group number fell 0.4% on the month, following a downwardly revised 0.4% gain in December. This figure, which excludes autos, building materials, office suppliers, gas station sales and tobacco, feeds into the government’s GDP calculations.
Gasoline-station sales were down 7.5%, the release indicated, after Energy Department data showed the national average fell 6 cents from December to $3.197 per gallon.
January retail sales -0.8% month/month vs. -0.2 est. & +0.4% in prior month … sales ex-autos -0.6% vs. +0.2% est. & +0.4% in prior month … control group -0.4% vs. +0.8% prior pic.twitter.com/RoCrsFC6Of
— Liz Ann Sonders (@LizAnnSonders) February 15, 2024
January inflation remained ahead of Fed target
Data published earlier this week showed that headline inflation was lower in January but was still rising at an annual rate of 2.9%. So-called core inflation, which strips out volatile components like food and energy, held at 3.9%.
The Fed has said it tracks core inflation pressures as part of its price-stability mandate, and the year-on-year gains remain nearly double its preferred target of 2%.
U.S. stocks extended earlier gains following the data release, with futures tied to the S&P 500 indicating a 12-point opening-bell advance and those linked to the Dow Jones Industrial Average suggesting a 93-point rise.
Benchmark 10-year Treasury note yields edged 2 basis points (0.02 percentage point) lower to 4.214% while two-year notes were pegged at 4.538%.
CME Group’s FedWatch now suggests the Fed will hold its benchmark rate steady at between 5.25% and 5.5% next month in Washington, with the odds of a May rate cut now pegged at around 38.5%.
Related: Veteran fund manager picks favorite stocks for 2024
