US retail sales dropped by 0.9% in January, marking the biggest decline in a year. This was primarily attributed to colder-than-usual weather, which kept many consumers indoors, leading to reduced sales at car dealerships and most other stores, including furniture retailers. The unusually low temperatures, the coldest since 1988, notably impacted the southern states, while fires in Los Angeles may have also contributed to the downturn.
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Sales fell 2.8% at auto dealerships and declined at furniture stores, home and garden centres. Even the usually robust online retail sector saw a 1.9% drop in sales. However, general merchandise stores, including large retailers such as Walmart and Target, as well as restaurants and bars, experienced sales increases.
While the cold weather likely played a significant role, the sales drop also suggests a decrease in consumer confidence, which had been reflected in recent surveys. Despite this, hiring and wage growth remain steady, indicating that the economy is still expanding. The Federal Reserve may find some reassurance in the slower growth, particularly after inflation surged in January.
Retailers that have struggled due to these factors are being forced to cut costs and close underperforming stores. Joann, a craft chain, filed for Chapter 11 bankruptcy for the second time in a year and will close around 500 locations. Additionally, some companies, including those in the furniture sector, may face rising costs due to ongoing tariff issues under President Donald Trump's administration.
Source: www.finance-commerce.com