Retail Sales Came Back in January

What Wednesday’s Economic Reports Tell Us

Harbor Manager With Laptop

Nitat Temmee

Retail sales were up, imports were more expensive, and industrial production rose, reports showed Wednesday.

Here’s a quick look at the most significant economic indicators of the day and what they tell us.

Retail Sales

  • Shoppers made cash registers ring again in January: Retail sales volume was up 3.8%, making up for the 2.5% decline in December, the Census Bureau’s report showed. 
  • The burst of activity exceeded the 1.8% gain economists had forecast, even though it’s less impressive if you take inflation into account—the figures are dollar values and not adjusted for price increases. Sales came back in most categories, especially online shopping, which surged 14.5% after an 11.4% decline in December. 
  • The report gave ammunition to economists who say consumers are still eager to spend and that retail sales in December declined because shoppers had already done their holiday buying earlier in the season.

Import prices

  • The stuff we buy from foreign countries got much more expensive in January, with import prices up 2%, according to a report from the Bureau of Labor Statistics—much more than the 1.3% gain economists had expected and the biggest one-month leap since 2011. 
  • The jump in prices provided more confirmation, in case you needed it, that inflation is plaguing wide swaths of the economy, and will likely encourage the Federal Reserve to take aggressive action to clamp down on it, economists said. 

Industrial production

  • Industrial production rose 1.4% in January, the Federal Reserve said, more than triple the 0.4% increase economists had expected. But the increase was mainly driven by utilities, which jumped 9.9% because of unusually cold weather in January following a mild December.  
  • Factories are still being held back by supply chain problems brought on by the pandemic, economists said, and that’s the reason for the modest 0.2% gain in manufacturing output and a 1% decline in car and light truck manufacturing. 

Mortgage Rates

  • Mortgage rates rose to 4.05% last week, the highest since 2019, from 3.83% the week before, according to data from the Mortgage Bankers Association. The spike—the largest one-week jump since March 2020—contributed to a further decline in refinancing applications, which are now down 54% in the last year. 

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  2. Bureau of Labor Statistics. “US Import and Export Price Indexes summary.”

  3. Federal Reserve. “Industrial Production and Capacity Utilization.”

  4. Mortgage Bankers Association. "Mortgage Applications Decrease in Latest MBA Weekly Survey.”

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