US retail sales unexpectedly drop in January

US retail sales fell by 0.8% in January compared to downwardly revised December’s rise from 0.6% to 0.4% and dipped well below forecast for 0.2% decline.

Core retail sales, which exclude automobiles, gasoline, building materials and food services, were down 0.6% last month, after increasing by 0.4% in December and disappointing expectations for 0.2% rise.

Winter storms and drop in sales of autos and gasoline service stations, were mainly to be blamed for weak January figures.

Weak numbers in January followed quite strong performance during the holiday season, though easing has been anticipated, as sales typically ease in January.

Economists remain cautiously optimistic and expect the impact of seasonal factors to fade and sales to pick up by the time, as the US economy remains resilient with healthy consumer spending, tight labor market and easing inflation, which is expected to boost household purchasing power.

Also, services spending growth in January is expected to remain strong and should keep afloat overall consumer spending, which accounts for more than two-thirds of US economic activity.