The uncertain outlook for the weak U.S. housing market combined with harsh winter weather in the first month of the year weighed on consumers, holding back retail sales, according to Financial Times. On Tuesday, the Commerce Department reported that retail sales in the U.S. gained just 0.3% in January from the month before, falling short of economists’ forecast for a 0.5% rise. The data brought the annual increase in retail sales to 7.8%, although Paul Dales of Capital Economics said, “Spending growth has clearly lost some momentum.”
The slowing retail growth is seen as being linked not only to severe winter weather, but also to the uncertain track for the labor market recovery, as well as wealth lost in the housing market. The National Association of Home Builders reported separately that its index of sentiment among builders was steady at 16 out of 100, suggesting the industry is still stagnant and the outlook remains unclear. Bob Nielsen, the NAHB chairman, said that tight lending is limiting the housing recovery, “and most do not see that situation improving anytime soon.” Also, the Commerce Department reported a 0.8% rise in business inventories in December, beating estimates and moving to an 8% annual increase.