US Retail Sales Increases At Slower Pace

Retail Sales in the U.S. rose at a slower pace in January as an increase in payroll taxes took a bite out of consumers’ paychecks.

The 0.1 percent climb followed an unrevised 0.5 percent increase in December, Commerce Department figures showed today in Washington. The advance matched the median forecast of 80 economists surveyed by Bloomberg.

A two percentage-point increase last month in the levy that funds Social Security reduced take-home pay, countering some of the gains in household disposable income from an improving job market. At the same time, more employment, combined with higher property values and stock prices, supports consumers and adds traction to purchases that make up about 70 percent of the economy, a boon for retailers such as Gap Inc. and Target Corp.

“The payroll tax increase is having some impact on spending here,” said Thomas Simons, an economist with Jefferies Group Inc. in New York, whose firm after today’s report is the second-best forecaster of retail sales for the past two years, according to data compiled by Bloomberg. “It looks like maybe momentum is not necessarily carrying forward into the first quarter. A lot of the data at this point is going to be kind of a mixed bag and difficult to interpret.”

Prices of goods imported into the U.S. rose in January for the first time in three months, led by more expensive fuel and building materials, a report from the Labor Department also showed today. The 0.6 percent gain in the import-price index followed a revised 0.5 percent decline in December that was larger than initially estimated.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell