US retail sales rose 0.3% in January, a government report shows today, as shopping activity rebounded unexpectedly despite growing economic worries.
The monthly snapshot was better than expected as most economists had expected retail sales to decline 0.3% after a 0.4% drop in December.
Retail sales are tracked closely by economists to assess consumer spending which is a vital economic driver.
Excluding car sales, which can fluctuate strongly, sales were also up 0.3%, according to the Commerce Department survey. The government revised sales, excluding cars, during December to show a decline of 0.3% instead of an initial estimate of a 0.4% drop.
The readings are likely to support the assumptions of some economists who believe the economy will avoid a recession. Other economists believe the world's biggest economy is on the verge or has already fallen into a recession.
The US Federal Reserve has cut interest rates aggressively in recent months amid a slowdown in growth in a bid to boost economic momentum which relies heavily on consumer spending.
Overall sales got a boost in January as car sales rebounded and as service station sales posted a gain. Car sales rose 0.6% last month compared with a sharp 1.1% decline in December while service station sales increased 2% after remaining steady in the prior month.
A rebound in clothing sales also helped pump up overall sales activity. Clothing store sales rebounded 1.4% last month following a 2.3% drop in December. The rebound in clothing sales suggests consumers responded to retailers' incentives last month, as many retailers slashed prices in a bid to pare their inventories.
In the 12 months to January, overall sales rose 3.9% in January and were up 4.9%, excluding cars.
But while the overall mood is positive, some analysts are pointing to certain figures in the Commerce Department report as suspect. In particular, the new car sales figure may be revised in coming months, they say.
The value of new car sales rose 0.6% in January, according to the Commerce report, but the auto industry reported a 5.6% drop in overall unit sales in January to 15.3 million cars and trucks, said one economist.
And despite the higher headline number for sales in the reprot, there were declines in many categories, which implied consumer spending was being pinched. Furniture sales fell 0.5% in January, building material sales were down 1.7% and department store sales declined by 1.1%.
Many analysts think the slowing US economy faces increasing risks of tumbling into recession and are closely watching for signs that consumers, who fuel 70% of national economic activity, will continue to scale back spending.
