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ETF Areas to Win on Upbeat January Retail Sales

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Retail sales in the United States increased 3% sequentially in January of 2023, the biggest increase since March of 2021 and way above market forecasts of a 1.8% rise. The reading showed American consumers continued to spend due to upbeat labor market and easing inflation. January gains came after a 1.1% drop in December.

Consumer spending makes up about 70% of U.S. economic activity. Thus, any gain in it will likely brighten the economic growth picture.Year-on-year, retail sales increased 6.4%.

Below we highlight a few areas and the related ETFs & stocks that may benefit handsomely.

Winning Areas

General Merchandise & Miscellaneous Store Retailers

General merchandise sales grew 3.2% sequentially in January and 4.5% year over year. Sales at department store rose 17.5% sequentially in January and up 5.4% year over year. Miscellaneous store retailers saw a 2.8% uptick in sales sequentially and 6.7% year-over-year gains. If job data remains stable, consumers may continue to splurge on activities.

Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) thus looks to be a great pick. The underlying Consumer Discretionary Select Sector Index of the fund seeks to provide an effective representation of the consumer discretionary sector of the S&P 500 Index.

Food Services & Drinking Places

Sales of this category gained 7.2% sequentially in January and 25.2% year over year.

AdvisorShares Restaurant ETF (EATZ - Free Report) is a pureplay restaurant ETF. This ETF is active and does not track a benchmark.

Motor Vehicle & Parts Dealers

Sales of this category gained 5.9% sequentially in January and up 2.8% year over year.

First Trust SNetwork Future Vehicles & Technology ETF (CARZ - Free Report) follows the S-Network Electric & Future Vehicle Ecosystem Index constituents are chosen by selecting the eligible Pure-Play companies in descending order of float-adjusted market capitalization until 100 constituents have been selected.

Clothing

Apparel and accessories sales gained 2.5% sequentially in the month and 6.3% year over year. Apparel Retail takes about 20% of the fund SPDR S&P Retail ETF (XRT - Free Report) . The fund is thus well-positioned to benefit from the trend.

Furniture Stores

Sales of this category gained 4.4% sequentially in January and has added 3.8% year over year.

Home improvement specialty retailer stocks like Home Depot (HD - Free Report) has exposure to XLY, Vanguard Consumer Discretionary ETF (VCR - Free Report) and VanEck Retail ETF (RTH - Free Report) .

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