WASHINGTON — U.S. retail sales rose at a slower pace in January as an increase in payroll taxes took a bite out of consumers’ paychecks.
The 0.1 percent climb followed an unrevised 0.5 percent increase in December, Commerce Department figures showed Wednesday in Washington. The advance matched the median forecast of 80 economists surveyed by Bloomberg.
A two percentage-point increase last month in the levy that funds Social Security reduced take-home pay, countering some of the gains in household disposable income from an improving job market. At the same time, more employment, combined with higher property values and stock prices, supports consumers and adds traction to purchases that make up about 70 percent of the economy, a boon for retailers such as Gap Inc. and Target.
“The payroll tax increase is having some impact on spending here," said Thomas Simons, an economist with Jefferies Group in New York, whose firm after Wednesday’s report is the second-best forecaster of retail sales for the past two years, according to data compiled by Bloomberg. “It looks like maybe momentum is not necessarily carrying forward into the first quarter. A lot of the data at this point is going to be kind of a mixed bag and difficult to interpret."
Prices of imported goods rose in January for the first time in three months, led by more expensive fuel and building materials, a report from the Labor Department also showed Wednesday. The 0.6 percent gain in the import-price index followed a revised 0.5 percent decline in December that was larger than initially estimated.
Stock-index futures held earlier gains after the reports as President Obama proposed spending on infrastructure and environmental projects in his State of the Union address.
Estimates for January retail sales in the Bloomberg survey ranged from a drop of 0.7 percent to a gain of 0.6 percent.