Retail sales fell in January, as a slow job market and rising gas prices kept consumers out of stores following the holiday season.

The advanced estimates for the United States retail and food service sales for January were $381.6 billion, an increase of 0.3 percent from the previous month, according to U.S. Census Bureau figures released on February 15.

While that number represents the seventh straight month of growth, sales failed to reach the 0.5 percent gain projection that was estimated by 79 economists in a Bloomberg News survey, tempering the sentiment that economic growth had spread to the retail industry.

“We had a very strong fourth quarter and it’s hard to keep that trend,” said Sean Incremona, senior economist at 4Cast Inc. “”I don’t think (retail sales) will continue as much going forward.”

Total sales during the months of November 2010 and January 2011 were up 7.6 percent from the same period a year earlier, but the 0.3 percent gain posted in January was the smallest since a drop in June.

While the harsh winter storms of January slowed down foot traffic in stores, the continuance of rising gasoline and food prices had more of an impact than the ice and slush on the sidewalks.

“The storms were there,” said Ryan Wang, an economist at HSBC Securities.  “But the signs were there regardless, spending has been moderate.”

Wang, who correctly estimated the 0.3 percent gain, said that while the numbers have been volatile the past few weeks, “there was no real surprise in the outcome.

“The weather impact really is kind of mixed,” said Incremona. “Building materials were a bit weak as a result, but most of the drop shouldn’t be attributed to it.”

Eight of the 13 major retail categories showed an increase in January, but demand at building material stores dropped 2.9 percent, an indicator of poor home sales. The National Association of Home Builders recorded a level of 16 on their sentiment index for the fourth consecutive month, with any level below 50 being described as poor by respondents.

But even with the slide in home sales, the retail market still depends on one thing; people having income from jobs.

“The key comes back to the labor market,” said Wang. “If we can see an increase there, then we could see even more growth.”

Weekly jobless claims declined by 22,000 to finish at 391,000. However, the bad weather  likely caused the aberration and does not paint such a sunny forecast for retail. Ultimately, it may come back to people just believing in the market.

“There needs to be a raise in consumer confidence,” said Incremona, who said that an increase would buoy spending. “I think we’ll continue to see fairly mild increases through the late spring.”

Comments are closed.