Led By Autos, Retail Sales Rise

Vehicles are back on top, helping to lift retail sales to a 0.2 percent gain in January. Excluding vehicles and pulled down by falling gas prices, sales inched only 0.1 percent higher. But retail sales excluding gasoline stations -- which is a central reading given the price fall -- are up 0.4 percent for a very respectable year-on-year gain of 4.5 percent. The reading excluding both autos and gasoline is also up 0.4 percent in the month for a year-on-year rate of plus 3.8 percent.

General merchandise sales, which have been soft reflecting price contraction for imports, rose a sharp 0.8 percent in January. Building materials rose 0.6 percent as did vehicles where the year-on-year rate is at plus 6.9 percent. Non-store retailers, reflecting building strength for e-commerce, are once again a standout, up 1.6 percent for a year-on-year 8.7 percent gain.

But there are soft spots in January including restaurants, down 0.5 percent but following a very strong run in prior months, and also furniture, also down 0.5 percent. Sporting goods, a discretionary but still small component, were also weak though the year-on-year rate is leading all the data at 9.1 percent.

A positive are upward revisions to December, now at plus 0.2 percent overall with ex-auto ex-gas now at plus 0.1 percent. Though many readings are modest, this report -- especially the ex-gasoline reading -- points to a healthy U.S. consumer and should lift confidence in first-quarter growth.

Recent History Of This Indicator:
Held back by vehicle sales, retail sales began to slow and finally contract going into year-end. But sales of vehicles, based on last week's data from manufacturers, look to be a positive for January with the Econoday consensus calling for a moderate 0.2 percent headline gain following a 0.1 percent decline in December. Declines in gasoline sales, the result of falling prices, have been skewing readings lower in this report. Outside of vehicles and gasoline, a respectable plus 0.3 percent gain is expected. Strength in this report, which would confirm the engagement of the consumer, is critical for the first-quarter outlook.