January sales are up 5.3%. — among the three highest percentage gains in 30 years.
By Manuel Gutierrez, Consulting Economist to NKBA
Retail sales rose a strong 5.3% in January to $568 billion (Figure 1.) This is a welcome gain after three consecutive months of declines. Not only was the trend reversal surprising, but so was its magnitude. Only three times over the past 30 years since these data have been collected has such an increase been recorded.
Two of those times were in May and June of last year, when retail sales jumped sharply following the cratering of businesses due to government-mandated shutdowns at the start of the pandemic.
On an annual basis, retail sales were 7.4% higher than the $529 billion generated in January 2020. This is also the biggest year-over-year increase since 2011, when retail also registered a 7.4% gain over January 2010 sales.
Although not evident in Figure 1, January’s volume is also a historical high. Sales at retail stores have never before been this high.
January’s sales increase was enjoyed by stores across the board (Figure 2, left panel.) Surprisingly, the largest gain was for Department Stores, whose sales jumped 23.5% to $10.7 billion. This category has been steadily losing ground to the internet and specialty retailers for more than 20 years, but consumers apparently reversed that trend for the month as pandemic restrictions were somewhat eased.
Other stores posting significant sales gains were Electronics & Appliance stores, up 14.7%; Furniture stores, +12%, and Internet & Mail Order, up 11%.
Even Restaurants & Bars posted gains in January. Sales were up a solid 6.9%, above the 5.3% average for all of retail.
On an annual basis (right panel, Figure 2), sales in three categories still lag their corresponding levels of a year earlier. Restaurants & Bars, which have suffered the most from the pandemic shutdown restrictions, experienced a year-over-year sales decline of 16.6%. The two other categories with losses are Department Stores, which, despite their strong gain in January, are still 3% behind the prior year, and Electronics & Appliance stores, off by 3.5% for the year.
Within the kitchen and bath industry, Building Materials stores posted sales of $40 billion in January, up 4.6% compared to December (Figure 3, left panel). This is a substantial increase for the month, although lower than the 5.3% average of all store types.
But on an annual basis, sales are up a hearty 19%, more than double the 7% increase for all retail sales (right panel, Figure 3).
Retail Sales by State
The Department of Commerce has, for the first time, developed a program to generate, on a monthly basis, state-level sales estimates. This is the first time it has provided access to retail sales data at the state level, and for now is experimental.
The data shows annual changes and lags on a monthly basis. Latest figures are for sales from October 2020. The Department of Commerce is working toward releasing the data with a shorter time gap.
Map 1 displays the change in sales for the 12 months ending in October 2020.
The largest increase is for Vermont, with retail sales up 20.8% over 2019. New York posted the second-highest gain, although nowhere near as robust as Vermont. Below are the top and bottom six states for this variable.
