US Retail Sales Surge As Consumer Confidence Returns

Wednesday 17th February 2021 – 13:37 (GMT)

Spending in the US has surged over the early part of 2021, buoyed by a new administration in the White House and an increase in consumer confidence. Figures released by the US Census Bureau have indicated January retail sales spiked by 5.3% month-on-month, massively outperforming the 1% consensus and firmly turning the tide on three straight months of falling numbers within the sector.

However, the latest readings could be too little too late following a weak turnout for the all-important festive spending season that now effectively runs from November to January. Many businesses rely on these months to make a majority of their profits, increasingly so in 2020 following coronavirus restrictions.

Bankruptcies and foreclosures are still likely on the horizon, but there were further green-shoots within the labour market that has a direct impact on retail. Most recently, there were 49,000 added to the Nonfarm payrolls in January whilst initial jobless claims continue to fall back from their Q2 2020 peak.

Armed with $600 stimulus cheques, US consumers appear confident that that the Biden administration can help return the now 10 million unemployed to work – with many more set to resume their usual spending habits over the year ahead.

Elsewhere, positive UK inflation readings helped push the pound back to its highest levels in nearly 3 years. GBP/EUR has already tested €1.15 whilst GBP/USD remains on course to test $1.40 in the coming days. Analysts will be looking for stabilisation above these key psychological resistance levels before the upward trend continues.