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U.S. January Retail Sales Fall 0.3%; Ex-Autos Rise 0.6%

U.S. January Retail Sales Fall 0.3%; Ex-Autos Rise 0.6%

Feb. 15 (Bloomberg) -- U.S. retail sales fell 0.3 percent in January, after spending on automobiles dropped from a three-year high. Sales otherwise rose 0.6 percent, led by spending on clothes, gasoline and general merchandise.

Last month's decline in all receipts to $347.7 billion followed an increase of 1.1 percent in December, the Commerce Department said today in Washington. The increase in sales excluding automobiles was the biggest since October and followed a 0.3 percent gain.

Sales of cars and light trucks fell during the month as automakers pared incentives. Other spending received a boost from an increase in the number of working Americans. As of January, employment had bounced back enough to exceed the pre-recession levels.

``Job growth has been good, labor incomes continue to chug along, and oil prices that are flat-to-lower provide a reasonably positive backdrop' to spending, Robert Mellman, an economist at J.P. Morgan Securities in New York, said before the report. ``We expect consumer spending to expand this year at about the same rate as last year.'

Retailers including Target Corp., Nordstrom Inc. and American Eagle Outfitters Inc. reported stronger-than-expected demand in January, aided by discounts and holiday gift cards.

The median forecast in a Bloomberg News survey of 77 economists called for sales to fall 0.4 percent to $348 billion last month after a previously reported gain of 1.2 percent in December. Sales excluding automobiles were expected to rise 0.4 percent to $267.7 billion after a previously reported rise of 0.3 percent in December.

Retail sales account for almost half of all consumer spending, which in turn accounts for about two-thirds of the economy.

Auto Sales

Sales at automobile dealerships and auto parts stores fell 3.3 percent last month, the biggest drop since June, after rising 4 percent in December.

Cars and light trucks sold at an annual rate of 16.2 billion last month, down 12 percent from a three-year high of 18.4 billion in December, industry figures show. Discounts and favorable lending terms had pushed up December sales.

General Motors Corp., the world's largest automaker, earlier this month added rebates of as much as $1,000 on its newest models such as the Pontiac G6 and Buick Lacrosse sedans.

Honda Motor Co., a Japanese automaker with U.S. plants, expressed optimism that fewer price breaks will be needed to sell its new models. The Tokyo-based company will lower incentives about 20 percent in the U.S. during the January-March quarter, Senior Managing Director Satoshi Aoki said yesterday.

``We have a strong lineup,' he said in an interview. The Ridgeline pickup truck is among those models, he said. Honda has gained market share in the U.S. for 11 straight years.

Gasoline

Service-station receipts increased 1.8 percent, the biggest increase since October, as prices rose during the month. Excluding cars and gasoline, sales increased 0.5 percent last month after rising 0.6 percent in December.

Internet and catalog purchases fell 0.2 percent after rising 0.8 percent.

Receipts at general merchandise stores, which include department stores, rose 0.9 percent in January, same as a month earlier. Department-store sales rose 0.3 percent last month, compared with a 0.4 percent increase in December.

Sales at clothing and accessory stores rose 1.8 percent, the biggest increase since October, after falling 0.2 percent. Sales at electronics and appliance stores fell 0.6 percent. Receipts at furniture stores fell 0.1 percent.

Food and Drink

Receipts at restaurants and drinking places rose 0.7 percent after rising 1.1 percent a month earlier. They rose 0.3 percent at food and beverage stores.

Spending at sporting goods, hobby, book and music outlets rose 0.6 percent after falling 0.5 percent.

Increased payrolls may have been the greatest driver of sales.

Employers added 146,000 workers in January. Twenty consecutive months of increases recovered all the jobs lost since the start of the 2001 recession. Even though the January gain was smaller than the 200,000 forecast, ``overall job market trends are still consistent with durable economic expansion,' said Robert DiClemente, chief U.S. economist at Citigroup Global Markets Inc. in New York.

That's giving consumers money to spend at luxury retailers such as Seattle-based Nordstrom, where January sales climbed 8.8 percent from a year earlier.

Sales at all U.S. retailers open at least a year rose 3.6 percent in January, the biggest gain in three months, the International Council of Shopping Centers said Feb. 3 in a statement. The New York-based trade group had forecast a 3 percent increase from a year earlier.

Spending Outlook

Consumer spending grew 3.8 percent last year, the most since 2000, after rising 3.3 percent in 2003, the Commerce Department reported Jan. 28. Spending this year may rise 3.5 percent, according to the median estimate of 68 economists surveyed Jan. 31 to Feb. 7.

The U.S. economy may grow at an average 3.7 percent annual rate in the first half of the year, faster than previously estimated, according to a quarterly survey of economists by the Federal Reserve Bank of Philadelphia. Consumer spending is forecast to grow 3.2 percent, up from a previous forecast of 2.9 percent.

``We have now seen enough positive signs in the economy to have some confidence that it is on course for sustained growth,' Janet Yellen, president of the Federal Reserve Bank of San Francisco, said in a speech last week.

Flooding in California, snowstorms in the Midwest and on the East Coast, and an ice storm in the Southeast may have limited sales growth in January. The month was the eighth-wettest January on record in the Midwest, according to the National Climatic Data Center in Asheville, North Carolina.

The weather may help explain a 0.3 percent decline at sellers of building materials.

Wal-Mart Stores Inc., the world's largest retailer, said January sales at U.S. stores open at least a year rose 2.5 percent, near the low end of its forecast, hurt by snowstorms. Wal- Mart had to close 42 stores because of the weather, spokeswoman Sharon Weber said.

Wal-Mart's sales are expected to rise 4 percent this month, the Bentonville, Arkansas, company reported over the weekend. That compares with a gain of 6.2 percent in February 2004. Wal-Mart says higher gasoline and food prices left its customers with less to spend on other products.


LINK: http://quote.bloomberg.com/apps/news?pid=10000006&sid=aCjVDBrBfb5k&refer=home