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A solid start to the new year for the US consumer.
Retail sales in the world’s largest developed economy notched up better than expected growth last month as new US president Donald Trump took to the White House – marking the fifth consecutive month of higher consumer spending.
Headline retail sales climbed 0.4 per cent in January compared to the month prior, better than the 0.1 per cent forecast by Wall Street economists. December’s growth was also revised up to 1 per cent from 0.6 per cent. Sales have now grown in every month since August last year.
A measure of “control retail sales” — which strips out more volatile items like cars, petrol and building materials and which is used to calculate GDP figures – also exceeded expectations with a climb of 0.4 per cent, said the US Census Bureau. Again, the December figures were given an upward revision to 0.4 per cent from an initial estimate of 0.2 per cent.
The figures suggest the US consumer has been humming along nicely since Mr Trump’s election in November as robust jobs growth has helped power the US economy.
Consumer growth could however be squeezed as new figures also out today show inflation accelerated at its fastest pace in nearly five years at 2.5 per cent in January.
Investors are now positioned for a more hawkish Federal Reserve under the Trump administration, after comments from chair Janet Yellen yesterday where she warned it would be “unwise” for policymakers to wait “too long to remove” its accommodative monetary policy.