Retail sales jump 5.3% in January thanks to $600 stimulus checks

Yahoo Finance’s Myles Udland, Julie Hyman, Brian Sozzi, and Emily McCormick break down the January retail sales data.

Video Transcript

MYLES UDLAND: Let's start this morning with breaking news on the economy. Retail sales for the month of January blowing away expectations. Yahoo Finance's Emily McCormick joins us now with some of the details on these numbers. Emily.

EMILY MCCORMICK: Miles, taking a look at these retail sales, really rocketing higher to start off 2021, helped in part by improving COVID-19 trends at the start of the year, as well as that additional government stimulus that reached consumers in January. Now, taking a look at these headline numbers, we saw retail sales rise at a 5.3% monthly clip. That was the fastest pace since June, and handily beat expectations for a 1.1% rise. It also followed a downwardly revised drop of 1% in December, and ended a three-month streak of declines in retail sales.

Now, taking a look beneath those headline numbers, we saw sales at department stores, electronics and appliance stores, and non-store retailers notably reversing their December declines. Now, department store sales surged 23 and 1/2% over December, but we're still down 3% year-over-year. And then taking a look at those non-store retailers, which approximate e-commerce sales, those jumping 11% in January, and now rising by nearly 29% year-over-year.

Now, also want to highlight that we did see some small improvements in food service sales, as well as clothing store sales, though both of those categories are also still down year-over-year. But looking out across retail sales, those still higher by 7.4% than January 2020, so extending that streak of year-over-year improvements that we have seen for this data since the summer. So again, seeing some really strong consumption trends here to start off 2021. Miles.

JULIE HYMAN: I'm going to take it, Emily. I believe we also saw some big increases in electronics and appliance sales, and gas station sales, as well. Maybe people getting back out on the road. I also want to ask you-- because we have been talking a lot about the increasing prices of energy, of oil right now-- and we got a producer price index, as well, today. And that showed increases, not just including energy, but excluding energy, as well.

EMILY MCCORMICK: That's right, Julie. And, actually, taking a look at this producer price index, that jumped by a record 1.3% month-on-month in January, the fastest monthly clip that we've actually seen since the series began in December in 2009. So, really some strong firming that we're seeing in producer pricing power. Now, consensus economists had been looking for a rise of 4/10 of a percent, so again, strong beat there. And most of that increase actually came because of a jump in prices for final demand services, so actually starting to see some improving pricing trends there for producers in the service sector.

Now, taking a look year-over-year, we saw producer prices rising by 1.7%. That was nearly double the expectation, and excluding food and energy prices, producer prices were up 2% versus the 1.1% rise expected. We should note that this is not necessarily the Federal Reserve's preferred gauge of underlying inflation trends, but we are, again, starting to see some firming pricing power here when it comes to the producer side of the equation. So overall, strong beats here on a lot of the economic data that we got out this morning.

MYLES UDLAND: All right, there you go. Inflationistas is getting everything they wanted and a bit more to start the year. Emily McCormick, thanks for all of that.