Retail Sales Decline More Than Expected in January 2025
Data released on Friday revealed a larger-than-anticipated decline in retail sales during the first month of 2025.
Headline Retail Sales Fall Sharply
According to Bloomberg data, headline retail sales decreased by 0.9% in January, exceeding economists' expectations of a 0.2% decline. This marked the most significant month-over-month drop in retail sales since January 2024.
December Sales Revised Upward
December retail sales were revised up to 0.7% from an earlier estimate of a 0.4% increase, as per data from the Census Bureau.
Core Sales Disappoint
Excluding volatile categories, the control group within Thursday's release declined by 0.8%, falling short of the expected 0.3% increase. January sales, excluding auto and gas, fell 0.5%, also below consensus estimates of a 0.3% increase.
Notable Declines
Sporting goods and hobby sales led the declines with a 4.6% drop, while motor vehicle and parts dealers experienced a 2.8% decline.
GDP and Interest Rates in Focus
"If the February and March data are equally weak, we could witness a negative GDP print for the quarter," said Thomas Simons, US economist at Jefferies. "This is not our base case, but something shy of 2% seems realistic."
Friday's retail sales data concluded a week of significant economic data releases. Earlier in the week, inflation readings for January exceeded Wall Street expectations, but economists expressed optimism within the details for markets and the Federal Reserve.
As of Friday morning, markets estimated a less than 50% chance that the Federal Reserve would cut interest rates by its July meeting, as indicated by the CME FedWatch tool.