US retail sales rose by 3pc in January, the biggest monthly gain since March 2021, and factory output rose by 1pc, signs of economic resilience that suggest the Federal Reserve will keep raising interest rates to slow demand and tamp down inflation.
Sales of motor vehicles and parts last month rose by 5.9pc from December, the Census Bureau said. Sales at furniture stores rose by 4.4pc and sales at electronics and appliances stores rose by 3.5pc. Sales are adjusted for seasonal variations and holiday differences but not for price changes.
Overall sales likely got a boost from warmer-than-normal weather in January along with catch-up demand for autos as production recovers from shortages of semiconductors and other parts.
Excluding autos, total retail sales increased by 2.3pc, and excluding autos and gas, retail sales were up by 2.6pc.
Manufacturing production rose by 1pc in January after falling by a revised 1.8pc in December, according to separate report from the Federal Reserve.
The unexpectedly large gain in retail sales along with robust factory output follow reports showing strong jobs and wage growth and stubbornly high inflation in January. Taken together, they suggest the Fed will keep to its already telegraphed plan to hike its target rate by a quarter point in each of the next two policy meetings to a range of 5-5.25pc, with a larger increases possible.
Sales at food services and drinking places rose last month by 7.2pc, while sales at general merchandise stores rose by 3.2pc, Census data show. Sales at gasoline stations were flat.
Industrial production, which includes manufacturing, utilities and mining output, was unchanged in January after a 1pc percent decline in December, according to Fed data. Utility output fell by 9.9pc in January from the prior month on unseasonably warm weather. Mining output rose by 2pc in January.
By Robert Willis
