NRF: Sales Gains Signal Discretionary Spending Strength

Consumers have demonstrated a willingness to spend money beyond the holiday season, even if cautiously, the National Retail Federation concluded after numbers emerged that marked January as the seventh straight month of retail industry sales gains.
Still, overall retail sales advances for the month fell short of economists’ expectations, driving prices down on Wall Street yesterday. Analysts pointed to higher raw material and fuel prices as impacting consumer spending, although weather may have had an effect as well.
NRF stated that retail industry sales, which exclude automobiles, gas stations and restaurants, increased 0.2% in January seasonally adjusted from December and 3.5% unadjusted year-over-year.
January retail sales released yesterday by the United States Commerce Department, the organization noted, put total retail sales, which include non-general merchandise categories such as autos, gasoline stations and restaurants, up 0.3% seasonally adjusted over December and 7.1% unadjusted year-over-year.
In January, consumers spent more money in grocery stores, health and personal care stores and electronics and appliance stores. Purchasing at clothing and clothing accessory stores decreased 0.3% seasonally adjusted over December, although sales did increased 1.8% unadjusted year-over-year. Grocery stores, recently subject to food inflation, managed a 1.4% seasonally adjusted sales advance from the previous month and a 3.8% unadjusted increase year-over-year. Electronics and appliance stores sales gained 0.3% seasonally adjusted over December but decreased 0.7% unadjusted year-over-year. Meantime, health and personal care store sales increased 0.5% seasonally adjusted month-to-month and 6.2% unadjusted from last year. Sporting goods, hobby, book and music stores sales declined 1.3% seasonally adjusted month-to-month and increased 0.4% unadjusted year-over-year.
“In spite of the economic uncertainties that still exist, consumers are clearly demonstrating their desire to spend on discretionary items once again,” said Matthew Shay, NRF president and CEO. “The industry is certainly benefiting from the renewed confidence we’re seeing in shoppers, although sustained growth in 2011 will largely rely on improvement in key economic indicators like employment and housing.”
NRF chief economist Jack Kleinhenz added, “Many factors, including stock market gains, tax cuts, income growth and savings built up during the recession are contributing to the recent spur in consumer spending, While some of what we saw in January is directly related to seasonal purchases, it’s encouraging to see spending on other discretionary items such as electronics also increased.”