Your Economy (No Politics)

[Bullwinkle]

US retail sales off 1.3 percent
Tue Mar 14, 11:02 AM ET


WASHINGTON (AFP) - US retail sales fell 1.3 percent in February as consumers retrenched following a spending spree in the prior month.

The decline was steeper than the 0.9 percent drop expected by Wall Street analysts. But it comes after a sharp 2.9 percent gain in January sales -- a figure revised upward from the prior estimate of a 2.3 percent increase.

Excluding the sometimes volatile category of automobiles, retail sales were down 0.4 percent, a figure slightly better than the 0.5 percent decline expected on Wall Street.

The report is a key indicator of consumer spending, which makes up the vast majority of US economic activity. But trends can be difficult to detect with the monthly reports, which can be affected by weather and other factors.

On a year-over-year basis, retail sales were up 6.7 percent, the Commerce Department figures showed.

Analysts said the huge swing from January to February was likely linked to weather, with unseasonably warm January weather bringing out shoppers who then stayed home the following month when winter weather returned.

"The fall in retail sales in February is clearly a downward correction after very strong figures in January," said Marie-Pierre Ripert, US economist at IXIS Corporate and Investment Bank.

"They are likely to rebound slightly in March. We still expect consumer spending to rise significantly in the first quarter."

Douglas Porter at BMO Nesbitt Burns agreed.

"Even with the setback in February, consumer spending is still on track for real growth of around a 5.0 percent annual rate in the first quarter, sparking a similar gain in overall GDP," he said.

"The next test will be the direction of sales now that the weather swings of the first two months of the year are out of the way."

Excluding both autos and gasoline, retail sales decreased 0.3 percent. There were steep declines in furniture and clothing sales and lesser drops in gasoline and restaurants.

Furniture-store sales decreased 4.0 percent, the sharpest drop since February 2003. Electronics-store sales fell 2.0 percent, also the biggest decline since 2003.

Gasoline station sales fell 1.6 percent, while clothing store sales fell 3.3 percent.

Restaurant sales fell 1.9 percent, the biggest drop since 2001.

http://news.yahoo.com/s/afp/20060314/bs_afp/useconomyretail_060314160214