- POSTED: 13 Feb 2014 22:51
- UPDATED: 14 Feb 2014 00:37
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US retail sales fell unexpectedly for the second straight month in January, dragged down by a drop in auto sales, government data showed on Thursday.
WASHINGTON: US retail sales fell unexpectedly for the second straight month in January, dragged down by a drop in auto sales, government data showed on Thursday.
Retail and food service sales dropped 0.4 percent from December, the Commerce Department said in a report pointing to more sluggishness in the economy than previously thought.
Excluding auto sales, retail sales were flat last month. Sales of motor vehicles and parts tumbled 2.1 percent.
A number of other sectors saw sales weaken, including furniture, clothing, department stores and online.
Bucking the slowdown and showing gains were building suppliers and gasoline stations, according to the data that is not adjusted for price changes.
The report also showed weakness at the end of last year as retailers wrapped up the crucial holiday shopping period, for many accounts for a substantial amount of their annual revenues.
The department revised December's reading down to a decline of 0.1 percent, from the prior estimate of a 0.2 percent gain.
Moreover, November's gain was revised downward to 0.3 percent from 0.4 percent.
The January sales slump in part can be explained by severe winter weather during the month, particularly on the East Coast, Barclays analyst Peter Newland said in a research note.
"However, movements in some other components are more difficult to square with that as a catch-all explanation - such as a drop in Internet sales and a strong gain in building materials," Newland said.
Some analysts pointed to consumers' tighter wallets.
"Consumers cash flows are constrained, and retailers are now feeling the squeeze," said Ian Shepherdson of Pantheon Macroeconomics.
The poor retail sales report suggested slower momentum in the economy as it entered 2014. The sales give a look at consumer spending, the main driver of US economic activity.
The data lowered Barclays' tracking estimate of GDP growth to 2.2 percent for the fourth quarter of last year, well below the Commerce Department's initial estimate of 3.2 percent.
"While some positive payback can be expected later in the quarter (absent the possibility of continued negative weather effects in February), the decline in January puts consumption on a weak grounding for Q1," Newland said.