WASHINGTON (AP) — Americans spent at the fastest pace in five months in February, pushing up retail sales by 1.1 percent from January. About half the increase reflected higher gasoline prices, but even excluding fuel purchases, retail sales rose 0.6 percent.
The report from the Commerce Department on Wednesday showed that Americans kept spending last month despite higher Social Security taxes that took effect this year.
Core retail sales, which exclude the volatile categories of purchases of gasoline, autos and building supplies, rose 0.4 percent in February compared with January.
Economists were encouraged by the stronger-than-expected gain in retail sales. Some said the increase means the economy may be growing faster in the January-March quarter than they had forecast.
“This all suggests that the hit to spending from the payroll tax cut and higher gasoline prices, which reduce the amount of cash available to spend on other items, hasn’t been too bad,” said Paul Dales, senior United States economist at Capital Economics. “The recent pickup in both employment and earnings growth bodes well for consumption growth later in the year, too.”
Auto sales rose 1.1 percent after a 0.4 percent January increase. The February gain was the biggest since December. Sales at gas stations surged 5 percent, the biggest advance since a 6 percent rise in August.
Sales at general merchandise stores, a category that includes major department stores such as Macy’s and big discount stores such as Walmart and Target, rose 0.5 percent in February. But the department store category as a whole fell 1 percent.
The solid increase in retail sales showed that Americans kept spending despite a payroll tax increase that has lowered take-home pay this year for most workers. A person earning $50,000 has about $1,000 less to spend in 2013. A household with two high-paid workers has up to $4,500 less.
The economy grew at a rate of only 0.1 percent in the fourth quarter, but many analysts believe the American economy will grow a modest 2 percent this year.
In a separate report, the Commerce Department said businesses increased their inventories by 1 percent in January from December, an encouraging signal that they expect consumers will spend more this year. That increase is up from 0.3 percent growth in December and the biggest gain since May 2011.
Total business sales fell 0.3 percent in January after a slight 0.1 percent rise in December.
Retail inventories increased 1.5 percent. Wholesale inventories grew 1.2 percent, the biggest gain in 13 months. Inventories held by manufacturers rose 0.5 percent.
Finally, the Labor Department reported Wednesday that import prices rose 1.1 percent in February after a 0.6 percent gain the previous month. Fuel imports jumped 4.9 percent. Excluding fuel, import prices were flat.
Low import costs have helped hold down inflation in the United States. Even with the last two months of increases in oil costs, import prices have fallen 0.3 percent in the 12 months ending in February.
Export prices rose 0.8 percent in February from January, pushed up by higher prices for agricultural goods. In the past year, export prices have increased 1.5 percent, led by a 13.4 percent jump in farm goods.
Article source: http://www.nytimes.com/2013/03/14/business/economy/us-retail-sales-jump.html?partner=rss&emc=rss
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