Overall US retail sales during January were up 3.8% seasonally adjusted from December and up 13% year-over-year, according to US Census Bureau data. By comparison, December sales were down 2.5% from November but up 16.7% year-over-year.

Despite occasional month-over-month declines, sales have grown year-over-year every month since June 2020, according to Census data.

Clothing sales were up 0.7% month-on-month in January and by 21.9% on the same period a year ago.

National Retail Federation (NRF) president and CEO Matthew Shay notes January’s numbers show that 2022 is starting very strong for consumers and retailers, especially on the heels of a record holiday season and record sales in 2021.

“While the year ahead has challenges with inflationary pressures, labour shortages, Covid-19 impacts, and uncertainty related to international tensions in Russia and China, today’s numbers show that despite these concerns, consumers are spending, and the economy remains in good shape. We are confident that retail sales growth and overall consumer financial health can continue, and current pressures in the economy should be moderated if election-year political pressures don’t result in policy decisions that compound the challenges our economy is already facing.”

NRF chief economist Jack Kleinhenz adds: “January sales overcame major headwinds that make the results all the more impressive. A triad of forces weighed on consumer behaviour and spending as weather slammed a large portion of the United States, the Omicron variant was relentless, and inflation was escalating. On top of that, the enhanced child care tax credit ceased at the end of 2021, impacting millions of families. Despite all that, consumers ramped up spending even after a record-breaking holiday season.”

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NRF’s calculation of retail sales – which excludes automobile dealers, gasoline stations and restaurants to focus on core retail – showed January was up 4.7% seasonally adjusted from December and up 8.5% unadjusted year-over-year. In December, sales were down 3.6% month-over-month but up 13% year-over-year. NRF’s numbers were up 12.5% unadjusted year-over-year on a three-month moving average as of January.

January’s results follow a 14.1 percent year-over-year increase in retail sales as calculated by NRF during the November-December 2021 holiday season. Both the rate of growth and the $886.7 billion spent during the holidays were new records despite the pandemic and other factors.

January sales were up in all but two categories on both a monthly and yearly basis, with year-over-year gains led by clothing and building materials stores and online sales. 

Clothing and clothing accessory stores were up 0.7% month-over-month seasonally adjusted and up 19.1% unadjusted year-over-year, according to NRF figures.

Online and other non-store sales were up 14.5% month-over-month seasonally adjusted and up 8.9% unadjusted year-over-year.

Neil Saunders, managing director of GlobalData, notes January retail sales were robust and show that the consumer continues to defy gloomy economic headlines.

“Nevertheless, growth has trended down compared to the past ten months and inflation is now playing a much bigger role in boosting the numbers. This means underlying volumes are more modest than the headlines suggest. The critical thing is how this trends forward – and, on this front, there is more downside than upside,” he says.

“The retail sector has kicked off the year on a good note, with January sales expanding by 12.3% over the prior year. While very robust, the numbers are not quite as shiny as they may first appear. First, this is the slowest pace of growth since February 2021, and represents a reasonable step down from the 16.6% uplift posted in December. Second, we believe that about 6.9 percentage points of this uplift is down to inflation, so while volumes are positive, they are less impressive than the headline number initially suggests.

“Nevertheless, despite the headwind of inflation and other economic concerns, the consumer is still out spending in force. One of the reasons for this is there is still a net transfer of spend from services into products. Vacations, entertainment and leisure are still not completely back to normal, and many households continue to indulge themselves with buying products in lieu of these things. The other reason is that while people are getting more concerned about price increases, it takes time for the reality of inflation to catch up with household finances. Although some lower-income cohorts are now having to make tough choices about what to buy, many others are not yet at the point of radically changing their spending patterns.”

Saunders adds, however, unfortunately, if inflation persists and interest rates rise, GlobalData believes this reality will start to bite later in 2022. “In this sense, retail is probably currently living on borrowed time,” he warns.

Core retail spending – which excludes gasoline, automotive vehicles and foodservice – rose by 8.5% on a year-over-year basis.

Saunders says: “Again, this is a solid outcome but one that is much more modest than the stellar growth of the past ten months. Behind this number, some interesting divergences are now emerging by sector.

“Apparel continues to do well, with stores reporting a stellar 19.1% uplift, albeit against a softer prior-year result. Inflation has played a role here as with less discounting prices are up. However, so too does the continued ‘closet reset’ as consumers have splashed out on new products for the upcoming season.

“Finally, non-store sales provide a point of interest. After two months of very high penetration of over 16% of all retail, levels have reset to a more modest 14.7%. Not only does this show consumers are returning to physical shops, it also demonstrates the often-shared view that digital penetration rates would rise inexorably is patently false.”