WASHINGTON: US retail sales fell unexpectedly in January and more Americans filed for jobless benefits last week, the latest signs the economy started the year on softer footing as unseasonably cold weather took its toll.
Large parts of the country have been gripped by freezing temperatures and snow storms, which have been blamed for weak hiring over the past two months.
Economists, however, are not worried yet and look for a rebound in the second quarter.
“The data unequivocally show that the unusually cold winter weather is weighing on economic activity. Consumer spending has literally frozen,” said Harm Bandholz, chief economist at UniCredit Research in New York.
Retail sales fell 0.4 percent last month, led by a tumble in automobile sales and categories like clothing, furniture stores and restaurants that depend of foot traffic. Economists had expected retail sales to hold steady. December sales were revised to show a 0.1 percent dip. They had previously been reported to have increased 0.2 percent.
Investors on Wall Street discounted the weak data, with US stocks up marginally in morning trade.
“It’s still too early to conclude that the soft patch is a more ominous sign of a more meaningful slowdown in the economy,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.
In a separate report, the Labour Department said initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 339,000 in the week ended February 8. Economists had expected them to slip to 330,000. A four-week moving average of claims, considered a better measure of labour market trends, rose 3,500 to 336,750, suggesting layoffs have picked up only marginally. Bad weather was likely behind the rise in filings last week.
“Weather may have an impact again in February on the payroll jobs report, although ... the government will count you as working unless you couldn’t make it in to work every day of the pay period,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.Reuters
