WASHINGTON (Reuters) – Retail sales posted their largest gain in four months in February as shoppers stepped up purchases of autos, clothes and other goods even as they spent more for gasoline.
Friday’s report from the Commerce Department pointed to strong consumer spending and acceleration in economic growth in the first quarter.
Total retail sales rose 1.0 percent, the Commerce Department said on Friday, the largest gain since October and the eighth straight monthly advance. The rise was in line with economists’ expectations.
January sales were revised up to a 0.7 percent increase from a previously reported 0.3 percent gain. Compared to February last, sales were up 8.9 percent.
“Consumer spending is still expanding at a healthy pace. Some of the strength we saw during the holidays continued into this year. That bodes well for the economy remaining on track for recovery,” said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St. Louis.
Excluding autos, sales rose 0.7 percent last month after gaining 0.6 percent in January.
U.S. stock index futures briefly turned positive on the data, while Treasury debt prices fell. The dollar held gains against the euro.
Consumers last month overcame a 3.7 percent increase in gasoline prices to spend on a range of goods, including autos, whose sales rose 2.3 percent after rising 1.2 percent in January. Receipts at gasoline stations increased 1.4 percent after rising 1.3 percent in January. Excluding gasoline, sales rose 0.9 percent after rising 0.6 percent in January.
“Retail spending has mostly been accelerating among people with sufficient income for discretionary spending so they are not as affected by higher gasoline prices as people with more limited incomes,” said Jerry Webman, chief economist at OppenheimerFunds in New York.
Unrest in the Middle East and North Africa has pushed Brent crude oil prices above $100 a barrel, raising concerns that high gasoline prices could eat into consumer pocketbooks already strained by high unemployment.
The Energy Information Administration said this week households would pay an average of $700 more for gasoline this year than in 2010.
The Federal Reserve is likely to nod to the rise in energy costs in a statement after a meeting on Tuesday, but analysts think the U.S. central bank will not see a grave enough threat to either growth or inflation to alter its policy course.
Outside autos and gasoline, consumers also spent on clothing, lifting sales 0.8 percent. Receipts at sporting goods, hobby, book and music stores increased 1.3 percent, while sales at building materials and garden equipment suppliers were up 0.6 percent.
So-called core retail sales — which exclude autos, gasoline and building materials — rose 0.6 percent after a 0.7 percent gain in January.
Core sales correspond most closely with the consumer spending component of the government’s gross domestic product report. Spending, which accounts for 70 percent of U.S. economic activity, grew at a 4.1 percent annual rate in the fourth quarter, the fastest in more than four years.
(Reporting by Lucia Mutikani, additional reporting by Ellen Freilich in New York, Editing by Andrea Ricci)
By: Teni Sow | Senior Editor at Tambapress.com and Regular Contributor to Presspresser.com