Retail Sales Ex Autos Rise, Inventories Unchanged

- Advance Retail Sales for January were unch. versus estimates of a .3% gain and an upwardly revised 1.2% increase in December.
- Retail Sales Less Autos for January rose .3% versus estimates of a .4% increase and an upwardly revised 1.3% gain in December.
- Business Inventories for December were unch. versus estimates of unch. and a downwardly revised .2% gain in November.

BOTTOM LINE: Retail sales in the US stalled last month as cheaper gasoline limited service station receipts and dealerships sold few cars, Bloomberg reported. Consumers redeemed gift cards and used the savings from lower gas prices to buy winter clothing and home furnishings. Sales at department stores rose 1.4% in January, the most since Oct. 2005. Nationwide gas prices fell to $2.17/gallon the week ended Jan. 29, the lowest in more than a year. I continue to believe retail sales will accelerate back to above-average levels over the intermediate-term as energy prices fall further, long-term rates remain low, inflation decelerates more, housing stabilizes at relatively robust levels, stocks continue to rise and the job market remains very healthy.

Inventories at US businesses were unch. as sales rose and companies maintained efforts to keep goods from piling up on shelves, Bloomberg said. Sales surged 1.4%, the largest gain since May. The inventory-to-sales ratio fell to 1.28 months’ supply of goods, the lowest since August, versus 1.3 months’ worth in November. I suspect a larger-than-expected trade deficit and inventory de-stocking will result in 4Q GDP growth being revised down to about 3.0% from 3.5%. As well, substantial inventory de-stocking in the first part of the year will likely lead to growth of around 2.5% for 1Q. I still expect growth to average around 3% for the year.