That’s the highest-ever growth registered for the month of January and more than 10 percentage points higher than the runner-up of 18.0% in January 2000. It also is nearly 3.5 times higher than the 8.3% growth recorded in January 2020.

(Bloomberg)—U.S. retail sales surged in January by the most in seven months, beating all estimates and suggesting fresh stimulus checks helped spur a rebound in household demand following a weak fourth quarter.

The value of overall sales increased 5.3% from the prior month after a 1% decline in December, Commerce Department figures showed Wednesday. It was the first monthly gain since September and all major categories showed sharp advances.

Last month, consumer spending through nonstore channels grew 29.0% over January 2020, according to a Digital Commerce 360 analysis of the Commerce Department’s advance monthly figures released Wednesday. Numbers exclude estimated fuel sales. That’s the highest-ever growth registered for the month of January and more than 10 percentage points higher than the runner-up of 18.0% in January 2000. It also is nearly 3.5 times higher than the 8.3% growth recorded in January 2020.

The Commerce Department’s nonstore sales—which are mainly online but include other sales such as orders through call centers, catalogs, door-to-door visits and vending machines—don’t align perfectly with spending accounted for in the pure ecommerce figures that the agency releases quarterly. But the data is an early indicator of trends in the online sector. Digital Commerce 360 analyzes non-seasonally adjusted Commerce Department numbers.

January’s retail performance was fueled by continued gains in the online sector, although ecommerce’s impact was smaller than prior COVID-19 periods. Growth in the nonstore channel accounted for more than half—50.6%—of all retail gains for the month.

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Total retail sales through all channels for Digital Commerce 360-defined segments again increased year over year for the ninth-straight month after taking a nosedive in April, when most stores were closed. Post-holiday growth accelerated, with total retail jumping 12.0% year over year, after several months of slowdowns following September’s 13.4% peak. January’s showing is the highest-ever recorded rate for the month and more than three times higher than the 3.9% growth registered in January 2020.

Digital Commerce 360’s calculation of total retail sales—which excludes sales in segments that don’t typically sell online such as restaurants, bars, automobile dealers, gas stations and fuel dealers—differs from overall Commerce Department data as many omitted categories are among those hardest hit during the coronavirus.

“We expected retail spending to ramp up in January thanks to the latest round of stimulus checks and better COVID trends, and it clearly did,” says Jack Kleinhenz, chief economist at the National Retail Federation. “There was none of the falloff in spending that we often find post-holiday, and the increase was even better than expected. There is plenty of purchasing power available for most consumers.”

With confidence growing thanks to the availability of COVID-19 vaccines plus states and local governments beginning to remove restrictions on economic activity, Kleinhenz says he expects consumer spending to build on this momentum going forward.

A surge in COVID-19 cases curbed spending at year-end, but since then, virus cases have ebbed and states have started to ease some restrictions on businesses and activity. The ability to shop and eat out, paired with the latest round of $600 stimulus payments, helped drive spending in the month across a variety of categories.

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The jump in retail sales could further embolden Republican opposition to President Joe Biden’s $1.9 trillion stimulus plan, which many in the GOP say is too big. Even so, Democrats are on track to narrowly pass the package without Republican votes, and the data could also be held up as evidence of how critical relief payments are to the economy and jobs.

The report shows that when fiscal aid “arrives to household balance sheets, it does get turned around fairly quickly and materializes in economic activity,” Michael Gapen, chief U.S. economist at Barclays Plc, said on Bloomberg TV.

With another stimulus package likely in March, “we should see a pretty rapid acceleration in demand and household spending as we move into the second quarter, which could be continued if vaccinations continue apace, and mobility gradually recovers over time,” Gapen said.

Other retail gains

Food services and drinking places rose 6.9% as restrictions eased at restaurants and bars across the country. Furniture stores and electronics and appliance merchants also saw double-digit gains in the month.

The so-called “control group” subset of sales, which excludes food services, car dealers, building-materials stores and gasoline stations, rose 6%, the largest gain since June.

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“The strength and composition of retail sales (specifically the tilt toward discretionary categories) is an encouraging signal that consumers’ aggressive saving patterns from 2020 are starting to ease—a development which, if sustained, could unleash a torrent of pent-up demand in 2021,” says Carl Riccadonna and Yelena Shulyatyeva, Bloomberg economists.

Gas station receipts rose 4%, which at least in part reflected higher fuel prices. The retail figures aren’t adjusted for price changes, so sales could reflect changes in gasoline costs, salesor both. At the end of January, the average nationwide price for a gallon of gasoline was $2.42roughly in line with pre-pandemic prices.

Other data from the Labor Department showed producer prices increased 1.3% in January, the biggest gain in records dating back to 2009, driven by broad-based gains in categories including energy and food.

The core measure, which excludes energy and food, jumped by 1.2%also the most in recordsover the prior month. Meanwhile, a report last week showed the core consumer price indexa key measure of prices paid by U.S. consumerswas unchanged in January for a second straight month, pointing to the pandemic’s lingering restraint on inflation.

A separate report from the Federal Reserve on Wednesday showed manufacturing extended its recovery in early 2021. Output rose in January by more than forecast, though it remained 1.9% below the pre-pandemic level.

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Also Wednesday, figures from the National Association of Home Builders showed confidence among residential construction firms improved slightly in February as the allure of low interest rates generated more prospective buyer traffic. Still, rising construction costs threaten to slow demand.

U.S. Treasury yields briefly touched a one-year high and the S&P 500 dropped for a second day.

Seasonal adjustment factors also played a role in the stronger-than-expected retail figures.

“We did not see the typical upswell in retail sales during the holiday season, which meant hefty seasonally adjusted declines,” Stephen Stanley, chief economist at Amherst Pierpont Securities, wrote in a note. “Retail sales on a not seasonally adjusted basis were down by more than 17% in January, but that was a much more moderate drop than what we typically see in the month, so the seasonal adjusted figure was up sharply.”

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