By Scott Kanowsky
Investing.com -- Retail sales in the U.S. grew by more than expected to begin the year, in a sign that consumers' willingness to spend may be increasing thanks in part to a tight labor market and a slight moderation in inflation.
According to new numbers from the Commerce Department on Wednesday, seasonally adjusted retail sales in the world's largest economy climbed by 3.0% in January on a monthly basis to $697 billion, rebounding from a decline of 1.1% in December. Economists had estimated that the figure would rise by 1.8%.
Spending at gasoline stations remained flat versus December but jumped by 5.7% compared to January 2022. Meanwhile, discretionary expenditures, which include money shelled out at restaurants and for items like electronics, also broadly increased.
The reading comes after data on Tuesday showed that inflation edged down marginally to 6.4% year-on-year in January, following a series of aggressive interest rate hikes by the Federal Reserve. However, inflation still accelerated month-on-month.
Meanwhile, nonfarm payrolls grew by 517,000 through the middle of the month, abruptly snapping a four-month trend of slowing job gains. Analysts had expected a further slowdown to 185,000, which would have been the slowest job growth in nearly two years.
December's payroll data was also revised up by 37,000 and November's by 34,000, reinforcing the surprise in the January numbers. As such, the numbers provided further evidence that a labor market that overheated as the pandemic eased is still only slowly losing steam.