Retail sales started the new year down, but the drop in sales was due to lower gasoline prices.  Specifically, the Advance Retail Sales Report for January (pdf) from the Census Bureau estimated that our total seasonally adjusted retail and food services sales were at $439.8 billion in January, which was a decrease of 0.8% (±0.5%) from the December sales of $443.3 billion, but 3.3 percent (±0.9%) above sales in January of last year.  December's sales were revised up by less than 0.1%, from $442.9 billion, but the reported percentage decline from November remained statistically unchanged at 0.9% lower.  Regardless, the revision to 4th quarter GDP will likely be minimal.  Estimated unadjusted sales in January, extrapolated from surveys of a small sampling of retailers, indicated sales fell almost 21% to $399,338 million, from $506,062 million in December, and were up 2.8% from the $388,279 million of sales in January a year ago, so once again the seasonal adjustments were a major factor in this report.  Although this report appears weak on first perusal, we wont be able to tell if this represents a real increase or decrease in goods sold until we get the consumer price data a week from now...

Once again we'll include the table of monthly and yearly percentage changes in sales by business type taken from the Census pdf.  The first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business type from December to January in the first sub-column, and then the year over year percentage change for those businesses since last January in the 2nd column.  The second pair of columns gives us the revision of last month’s October advance monthly estimates (now called "preliminary") as revised in this report, likewise for each business type, with the November to December change under "Nov 2014 revised" and the revised December 2013 to December 2014 percentage change in the last column shown.  For reference, here is what those December percentage changes looked like before this month's revision....   

From the above table we can see that January sales at gas stations were down 9.3% to $38,952 million, and as they accounted for 8.8% of total retail sales, retail sales excluding gas station sales were nearly stagnant, falling less than 0.1%..  Sales at motor vehicle and parts dealers, which account for more than 20% of this report, also contributed to the January sales decrease, as they fell 0.5% to $90,778 million, leaving retail sales excluding the automotive group down 0.9%. Take out car dealers and gasoline, and retail sales were up 0.2%. From the first column, we can see that the other businesses showing weakness in January were the specialty stores, such as sporting goods, book and music stores, which saw their seasonally adjusted sales fall 2.6% to $7,460 million, clothing stores, where sales fell 0.8% to $21,435 million, and furniture stores, where sales fell 0.7% to $8,656 million.  Meanwhile, miscellaneous store retailers saw January sales rise 2.6% to $10,213 million, and sales at bars and restaurants rose 0.8% to $50,067.  However, since we don't know the direction or magnitude of the price changes in the goods sold, we cannot guess how this report will impact 1st quarter output.  We suspect that it might be lower than the 4th quarter, because nominal seasonally adjusted sales in January were somewhat lower than those of both October and November, but a PCE deflator for goods like the negative 1.0% we saw in December could reverse that.

Again, since the overall revision to December retail sales was less than 0.1%, this report will have scant impact on 4th quarter GDP revisions. However, within the business types, there were some notable revisions to the original advance report from December (December percentage change table shown here) with this release (shown in 3rd column above).  The largest revision was in sales at miscellaneous stores, which were reportedly down 1.9%, and have now been revised to show sales up 0.6%.  Other business types seeing upward revisions included building material and garden supply centers, originally shown with a 1.9% decrease in sales, which has now been revised to a decrease of 0.7%, and for restaurants and bars, where sales were originally reported up 0.8%, which are now revised to show December sales 1.4% higher.  Meanwhile, sales at gas stations, first reported down 6.5%, are now shown to have seen sales fall 7.4%, while December sales at clothing stores were revised from a decrease of 0.3% to a drop of 1.2%, and sales at specialty stores, such as sporting goods and bookstores, were revised from a decrease of 0.2% to a drop of a full one percent.

(crossposted from MarketWatch 666)