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Retail sales is two thirds of US economic Original Source Link: (May no longer be active)
http://quote.bloomberg.com/apps/news?pid=10000006&sid=a5DTpyZqX6Fs&refer=homehttp://quote.bloomberg.com/apps/news?pid=10000006&sid=a5DTpyZqX6Fs&refer=home
U.S. February Retail Sales Rise 0.5%; Ex-Autos Up 0.4%
March 15 (Bloomberg) -- U.S. retail sales increased in February for a third month as consumers bought more from department stores, auto dealers and electronics outlets, evidence their spending is powering the economy.
The 0.5 percent rise to $352.1 billion followed a revised 0.3 percent gain in January, initially estimated as a decline, the Commerce Department said today in Washington. Excluding automobiles, sales rose 0.4 percent after a 1 percent surge.
Spending has been fueled by the addition last year of 2.2 million jobs and a 5.7 percent rise in wages and salaries. Retailers such as Wal-Mart Stores Inc. and Kohl's Corp. posted their biggest sales gain in nine months in February, industry reports showed earlier this month.
``Employment is picking up and income growth is pretty solid,'' Michelle Girard, a senior economist at RBS Greenwich Capital in Greenwich, Connecticut, said before the report. ``All of this bodes well for consumer spending.''
A 0.6 percent increase to $349.8 billion was forecast for retail sales after a previously reported 0.3 percent drop in January, according to the median estimate of economists in a Bloomberg News survey. Estimates ranged from a 0.3 percent rise to a 1 percent gain. A 0.8 percent was expected excluding automobiles.
Retail sales account for almost half of consumer spending, which in turn makes up about two-thirds of the U.S. economy.
Consumer Spending
Consumer spending rose at a 4.2 percent annual rate in the final three months of 2004 after a 5.1 percent pace in the third quarter, which was the fastest in three years, the latest Commerce Department data showed. Purchases probably slowed to a 3.1 percent rate in the current quarter, according to the median survey of economists by Bloomberg News from March 1 to 8.
For all of last year consumer spending grew 3.8 percent, the most since 2000, after rising 3.3 percent in 2003.
Automobile dealerships and auto parts stores had a 0.7 percent increase in sales last month after a 2.1 percent decline. Purchases of new cars and light trucks ran at a 16.3 million annual rate last month after 16.2 million in January, according to industry data. Sales have slowed since an 18.4 million pace in December, prompting automakers to sweeten incentives.
General Motors Corp., the world's largest automaker, on March 10 added rebates of $1,000 on most models that have been unsold on dealer lots more than four months. The incentives, which run through March 31, are in addition to rebates ranging from $500 to $3,500 on most models, spokeswoman Deborah Silverman said. GM sales fell 13 percent last month from a year earlier and the company has cut production to clear inventory.
Fuel
Higher fuel prices may restrain auto sales, Chrysler Chief Executive Dieter Zetsche said in an interview on March 8.
``We saw some effect of fuel prices last year for total market demand, and if we really would see $2.20 (a gallon) or whatever, we would feel that pain again,'' Zetsche said. Chrysler, the No. 3 U.S. automaker, expects sales this year to match 2004's 16.9 million cars and trucks.
General merchandise stores, which include department stores, had a 0.7 percent rise in sales last month after a 0.9 percent gain. Sales at clothing and accessory stores rose 1.1 percent after rising 1.7 percent. Department store sales rose 0.5 percent.
Electronics
Electronics and appliance store sales rose 1.6 percent in February after a 2 percent jump.
Sales at restaurants and drinking places increased 1.2 percent after rising 0.8 percent in January. They rose 0.4 percent at food and beverage stores, compared with 0.7 percent the month before.
``I think the economy's strong,'' Andy Puzder, chief executive of CKE Restaurants Inc., said in an interview on March 11. ``Even with the gas prices going up and the difficulties we're having, people still seem to have spendable cash.''
Sales at CKE's restaurants open at a least a year rose 2.3 percent in February for Carl's Jr. and 3 percent for Hardee's, the company said earlier this month.
Sporting Goods
Spending at sporting goods, hobby, book and music outlets rose 0.1 percent after falling 0.8 percent.
Sales at non-store retailers such as those made online or through catalogues were unchanged in February after a 1 percent increase the month before.
Building materials sales fell 1.3 percent last month, the biggest drop since February 2003, after a 0.6 percent increase.
An increase in gasoline prices may have helped boost the overall sales figure. The value of sales at filling stations rose 0.9 percent in February after a 1.8 percent increase.
The average price of a gallon of unleaded gasoline was $1.91 in February, up from $1.83 the month before, according to the Department of Energy. They're higher this month as well, with the average price in the week ended March 7 exceeding $2.
Same-Store Sales
Excluding motor vehicles, gasoline and building materials, sales rose 0.6 percent last month, compared with a 1.1 percent rise in January.
Sales at stores open at least a year increased 4.9 percent in February from the same month in 2004, according to the latest International Council of Shopping Centers figures. Wal-Mart, the world's largest retailer, said same-store sales rose 4.1 percent, the most since May. Sales were up 6.1 percent at discounter Kohl's, based in Menomonee Falls, Wisconsin.
Job growth is lifting wages, which rose 5.7 percent last year, according to Commerce Department data. The U.S. added 262,000 jobs in February, the most since October.
Tax refunds may be helping sales, economists said. The government had paid out $106.5 billion in tax refunds through March 4, up 6.2 percent from $100.3 billion during the same period in 2004, according to Internal Revenue Service figures released March 8. The average refund received by taxpayers so far this year is $2,371, up 8.7 percent from $2,182 over the same time last year.
The economy is projected to expand at a 4 percent annual pace from January through March, economists said in a Bloomberg survey conducted from March 1-8. Gross domestic product grew at a 3.8 percent annual pace in the fourth quarter, the Commerce Department said last month.
Last Updated: March 15, 2005 08:30 EST
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