Retail sales had their smallest monthly increase since the Great Recession last month, disappointing many in the industry who were hoping the continued drop in gas prices and recovering economy would spur consumer spending in the closing weeks of the 2014 retail fiscal year.
According to data released this morning by the Commerce Department, total retail sales rose by a negligible three-tenths of a percent (.3%) in January on a 12-month smoothed basis, the lowest monthly increase since September of 2009, and a big drop from December’s 2.3% rise. On a year-over-year basis, they rose 3.3% from the same month last year, to $439.8 million, but fell by .8% compared to December.
Total retail inventory increased by 2.4% in December, the most recent month available, resulting in a slightly higher inventory-to-sales ratio for the month.
Auto sales remained relatively strong in the month, increasing by 4.7% on a 12-month smoothed basis. Excluding autos, retail sales dropped by .75%, going into the red for the first time in almost five and a half years.
A huge plunge in sales of gasoline drove much of the decline. Year-over-year sales at gas stations fell by over 23 percent to an annualized $35.3 billion. Though gas prices appear to have bottomed out and started to rise in the past week, the average cost of a gallon in the U.S. has dropped by more than 32 percent in the past year, according to the Automobile Association of America.
But it doesn’t look like consumers have taken the billions they’ve reportedly saved on gasoline and begun spending them on apparel. Department, chain and discount stores saw sales drop by over 2 percent on a smoothed basis.
Continued declines in store traffic, combined with deep discounting to clear out excess inventory in advance of most retailers’ fiscal year-ends — not to mention a couple of major snowstorms in the Northeast at the end of January — were the primary culprits.
Apparel specialty stores managed to turn in only a .4% increase, resulting in a .6% drop for the combined sectors.
E-commerce, which is growing faster than bricks-and-mortar retailing, helped compensate for the mall no-shows, with non-store retailing enjoying a 6.4% sales increase in January, better than December’s 6.1% rise.
The only bright spot was the restaurant sector, where sales rose by 11.5% on a 12-month smoothed basis, to $50 billion, their best monthly performance in more than nine years, helped by the popularity of fast casual dining options very popular with Millennials and older consumers alike.