WASHINGTON (AP) -- The U.S. Commerce Department reports on spending at retail businesses and restaurants in January. The report will be released at 8:30 a.m. Eastern Thursday.
MODEST GAIN: Economists expect that retail spending rose 0.1 percent last month, according to a survey by FactSet. That would follow December's 0.2 percent gain.
The January report will likely reveal just how much cold weather affected shopping. Heavy winter storms across the country cut into store traffic and weighed on post-holiday sales. Major retailers have reduced their profit outlooks, including Wal-Mart Stores Inc.
The retail sales report is the first look at last month's consumer spending, which accounts for about 70 percent of all economic activity. Economists anticipate that stronger consumer spending this year should cause growth to accelerate.
Yet the economy appears to have lost most of its momentum from the end of last year. Factories received fewer orders. Pending home sales plummeted to their lowest level in more than two years.
And the past two monthly job reports were underwhelming. Only 113,000 workers were hired in January. That's slightly better than the 75,000 jobs created in December. The unemployment rate has fallen 0.4 percentage points to 6.6 percent during the previous two months. But some of those gains came from workforce departures and hiring for low-wage jobs.
All of this suggests that consumers were reluctant to spend much last month. Excluding motor vehicles, economists forecast a meager 0.2 percent increase in retail spending.
AUTO SALES DOWNSHIFT: Freezing temperatures have also reduced the pace of auto sales.
Slightly more than 1 million vehicles were sold last month in the U.S., about 32,000 fewer than a year ago. That was the first year-over-year monthly sales drop since August of 2010, according to Ward's Automotive — but one that analysts said should be short-lived.
Vehicles sold at an annual rate of 15.2 million last month, down from 15.3 million in December. Sales last year totaled 15.6 million. Economists forecast that auto purchases will approach 16 million this year, but warmer weather is needed before more Americans feel comfortable enough to go on test drives.
- Consumer Discretionary
- Budget, Tax & Economy