U.S. retail sales slumped in January for the second straight months, falling 0.8% from the month before, according to a new Commerce Department report and double the amount forecast by many economists.
The drop follows a 0.9% decline in December from November and a 0.4% increase in November from the month before.
Excluding auto sales the drop was 0.9% in January. When auto and gasoline sales are excluded, sales increased just 0.2% in January, largely reflecting the steep drop the past few months in fuel prices.
Six of the 13 major retail sales categories reported a drop in January with gasoline sales falling 9.3%, the biggest decline since December 2008.
On the upside, growth over the past year in retail sales was healthy with a 3.3% increase from January 2014.
“Lower gas prices provided a welcome boost to sales early on and will continue to provide a floor to spending, but continued, above-trend growth in sales will need to stem from organic job and income growth,” said Sterne Agee Chief Economist Lindsey Piegza. “The U.S. labor market is improving in terms of the number of jobs created, but the quality remains lackluster, putting little upward pressure on wages and keeping consumers cautious.”
She said going forward, gasoline price windfalls will continue to keep overall spending positive but at a slower pace than the initial rise in October and November would suggest, meaning a more muted contribution to overall economic growth from consumer spending.
Meantime, a separate report is forecasting import cargo volume at the nation’s major retail container ports is expected to rise 10.1% this month over the same time last year, according to the monthly Global Port Tracker report from the National Retail Federation.
This comes despite West Coast ports coming closer to a possible shutdown due to the lack of a contract with dockworkers and terminal operators suspending vessel loadings and unloadings on Feb. 12, along with Feb 14 through Feb. 16, reportedly due to work slowdowns by longshoremen.
Ports covered by Global Port Tracker handled 1.44 million 20-foot equivalent units in December, the latest month figures are available, up 3.2% from November and 9.3% higher from December 2013. That brought 2014 to a total of 17.3 million TEUs, an increase of 6.6% over 2013’s 16.2 million.
January was estimated at 1.48 million TEUs, up 7.5% from January 2014. February is forecast at 1.37 million TEUs, up 10.1% from last year while the months of March through June are projected to show increases of between 3% and 5.3%. Such numbers would bring the first half of 2015 to 8.8 million TEUs, an increase of 5.8% over the same period last year.
“East Coast ports have been the beneficiaries of the labor disputes on the West Coast,” said Ben Hackett, Hackett Associates founder, which collaborates with NRF on the report, in referring to the shift of market share that has occurred as cargo has been diverted in recent months because of West Coast congestion. “We have to admit that we underestimated the level of the switch.”
Following negotiations that began last spring, the contract between the Pacific Maritime Association and the International Longshore and Warehouse Union expired on July 1. Despite nine months of ongoing talks, the lack of a contract and other operational issues has led to crisis-level congestion at the ports.
Global Port Tracker covers the U.S. ports of Los Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Hampton Roads, Charleston, Savannah, Port Everglades and Miami on the East Coast, and Houston on the Gulf Coast.