Retail sales keep rising

WASHINGTON - Shoppers snapped up new cars, clothing, and electronics in February, pushing retail sales up for the eighth straight month.

Sales rose 1 percent last month, the Commerce Department reported Friday, though part of the gain reflected higher prices for gasoline. Still, excluding sales at gas stations, retail sales rose a solid 0.9 percent.

February's jump in sales followed a strong upward revision that showed a 0.7 percent increase in January. That was more than double the original estimate.

"This is a very encouraging report," said Paul Ashworth, chief U.S. economist at Capital Economics. He said spending should grow by a strong 3 percent or more in the first three months of this year. Consumer spending is closely watched because it accounts for 70 percent of total U.S. economic activity.

Job growth and lower Social Security taxes are helping Americans keep up spending after the biggest quarterly increase in four years in the October-December period.

"Consumers are not yet showing any ill effects from rising food and energy prices," said Julia Coronado, chief economist for North America at BNP Paribas in New York, who correctly forecast the gain in sales. "The numbers are consistent with consumers spending at a slower pace than the fourth quarter but still a solid pace."

However, a separate report Friday showed some cause for concern. The Reuters/University of Michigan gauge of consumer sentiment dropped to 68.2 this month from 77.5 in February.

"Consumers are reacting to the run-up in gas prices, which accelerated in the middle of February," said Ryan Wang, an economist at HSBC Securities USA Inc. in New York. "It's taking up a bigger portion of their wallet."

The 9.3-point slump in sentiment was the biggest since October 2008, the last time average gasoline prices topped $3.50 a gallon. The national average Friday was $3.54.

Ten of 13 major categories in the retail sales report showed an increase last month, including gains at department stores and electronics retailers, the government figures showed.

February's retail sales totaled $387.1 billion, up 15.3 percent from the recession low in December 2008.

Auto sales led the February increase, rising 2.4 percent. Dealers have enjoyed stronger demand in recent months as the economy improves and more people find jobs.

The major automakers offered discounts last month, and that gave momentum to sales. All the major car companies reported double-digit gains for February.

"Growing consumer confidence combined with pent-up demand will continue to have a positive influence on industry sales going forward," Donald R. Johnson, vice president for North American sales at General Motors Co., said earlier this month.

"We continue to believe that we're going to see this slow-but-steady growth throughout the year."

Better weather brought people back to department stores. Sales rose 1 percent, a rebound from a 0.4 percent drop in January, when winter storms kept people from shopping.

Online shopping, which had benefited from the bad weather in January, showed a 0.3 percent dip in February.

Sales at electronics and appliance stores rose 0.9 percent in February after falling 0.2 percent in January.

Sales at specialty clothing stores rose 0.8 percent. Sales at hardware stores bounced back in February, rising 0.6 percent after having fallen 1.3 percent in January, a reflection of the severe weather.

Percentage change in retail sales in

key categories last month compared

with January.

Category % change

 Auto dealers +2.4

Gas stations +1.4

Restaurants/bars +1.2

All retail sales +1.0

 Department stores +1.0

Electronics +0.9

Clothing +0.8

Building materials/

garden supplies +0.6

Grocery stores +0.6

Furniture -0.8

SOURCE: Commerce Department

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