Sales at US retailers unexpectedly climbed in February as shoppers braved blizzards to get to the malls, signaling consumers will contribute more to economic growth.
Purchases increased 0.3 per cent, the fourth gain in the past five months, Commerce Department figures showed today in Washington. Figures for the prior two months were revised down, taking some of the shine off of today's data. Sales excluding autos rose 0.8 per cent, exceeding all estimates.
A report last week showing the economy lost fewer jobs than anticipated in February signaled employment is on the verge of accelerating, a development that would spur spending in coming months. Macy's Inc. was among retailers that beat estimates last month as customers overcame the weather to shop for Valentine's Day gifts and spring merchandise, a sign the expansion is broadening beyond manufacturing.
``The storms were apparently not quite as disruptive as anticipated,'' said Adam York, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, whose forecast for a 0.6 per cent gain excluding autos was the highest of those surveyed. ``As we start adding jobs in the spring, employees will gain income and hours and retail sales should follow.''
Consumer sentiment
The Reuters/University of Michigan preliminary index of consumer confidence fell to 72.5 in March from a final reading of 73.6 a month earlier. The index was forecast to rise to 74, according the median estimate in a Bloomberg News survey of 68 economists.
Inventories at US businesses were little changed in January as sales climbed, signaling companies may need to increase orders to prevent shelves from emptying, the Commerce Department reported today.
Retail sales were projected to fall 0.2 per cent, according to the median estimate of 77 economists in a Bloomberg survey. Forecasts ranged from a decline of 1 per cent to a 0.9 per cent gain. The Commerce Department revised January data down to show a 0.1 per cent increase compared with an originally reported 0.5 per cent gain.
Purchases excluding autos were projected to increase 0.1 per cent, according to the survey median.
GDP figures
Excluding autos, gasoline and building materials - the retail group the government uses to calculate GDP figures for consumer spending - sales increased 0.9 per cent after a 0.6 per cent gain. The government uses data from other sources to calculate the contribution from the three categories excluded.
Ten of 13 major categories showed increases in sales last month, led by electronics and appliances stores, and grocery stores. Purchases of electronics climbed 3.7 per cent, the biggest gain since January 2009. Receipts at bars and restaurants climbed 0.9 per cent, the most since April 2008.
Auto sales dropped 2 per cent after decreasing 1.5 per cent in January. The storms that pushed seasonal snowfall totals to records in parts of the eastern US made some dealers lots impenetrable, while a recall by Toyota Motor Corp. may have also hurt auto demand.
Chain stores
Chain stores turned in a better-than-forecast performance last month, compared with a low point last year, industry figures showed last week. Macy's Inc., Abercrombie & Fitch Co. and Gap Inc. beat analysts' estimates in February as holiday sales tempted consumers to go shopping in a month of record snowfalls.
February comparable-store sales climbed 4.1 per cent, topping the Retail Metrics 3 per cent estimate. It was the sixth straight monthly gain and the biggest in 27 months. Purchases fell 4.1 per cent in February 2009, Ken Perkins, president of Swampscott, Massachusetts-based Retail Metrics, said last week.
TJX Corporation Inc., an off-price apparel chain, reported a 16 per cent sales increase in the four weeks ended Feb. 27 from a year earlier.
``We achieved these sales despite the harsh snowstorms that affected many regions in the country,'' said Sherry Lang, vice president for investors, in a teleconference on March 4. ``The month ended on a stronger note than we had anticipated.''
Figures last week that showed the economy lost fewer jobs than anticipated last month signal employment is on the verge of accelerating, a development that would spur spending in coming months.
Job losses
The Labor Department reported March 5 the economy lost 36,000 jobs in February, even accounting for job losses caused by the blizzards. The unemployment rate held at 9.7 per cent for a second month, indicating the labor market is stabilizing.
Consumer spending rose at a 1.7 per cent annual pace in the first quarter, the government reported last month. Economists surveyed by Bloomberg last week forecast growth to average 2.25 per cent in the first half, compared with the 3.3 per cent average during the two decades through 2007.
Households are still trying to overcome a record loss of wealth during the recession as home values and stock prices plunged, reasons why spending will be slow to recover.
The economy grew at a 5.9 per cent annual pace in the fourth quarter, the strongest showing in more than six years as companies tried to stabilize inventories, the government reported last month. Economists surveyed by Bloomberg this month forecast growth will slow to 2.8 per cent in this quarter.
Bloomberg News
