Higher gas prices fuel gain, but shoppers show resilience
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — U.S. consumers boosted purchases at retail stores in February, and while a big chunk of their cash went to fill up gas tanks, they also spread their money around in a sign that they are not tapped out.
Retail sales advanced 1.1% in February to mark the biggest gain in five months, the Commerce Department said Wednesday. Economists polled by MarketWatch expected retail sales to jump 0.7%.
The figures suggest that consumer spending — the linchpin of the economy — is holding steady despite a spike in gasoline prices and higher payroll taxes in 2013. Many economists worried that spending would sag early in the year and act as a drag on U.S. growth.
The retail report is the latest in a string of data that suggest the economy is holding up pretty well. What’s more, gas prices are starting to subside, home values are on the rise again and the U.S. stock market has hit new highs. That might support further increases in retail sales over the next few months.
Consumer spending accounts for more than two-thirds of the U.S. economy and sales at retailers represent about one-third of that consumption. That makes retail sales a good proxy for how fast the U.S. is growing, though economists look at longer-term trends because the monthly data is volatile and subject to sharp revisions.
In premarket trading, stock futures turned slightly higher, buoyed by the retail-sales data. Read: Stock futures turn up on retail sales.
Inside retail report
The biggest increase in sales occurred at gas stations, where purchases jumped 5.0%. That was the biggest one-month gain since last August.
In February, the average nationwide cost of a gallon of gas jumped more than 12% to $3.85 from $3.43 at the start of the month. Prices leveled off in early March after rising 10 straight weeks, however.
Gas stations accounted for about half of the overall rise in retail sales, but other segments also posted strong performances. Excluding gas stations, sales rose a still-healthy 0.6%.
Sales jumped 1.1% for auto dealers, 1.6% for Internet and mail-order companies, 1.1% for home-improvement stores and 0.8% at supermarkets. The increase in spending at grocery stores likely reflects higher food prices, however.
Excluding autos and gas, sales rose a smaller 0.4%. The auto sector, which generates about one-fifth of total sales, is prone to large monthly swings that can distort broader retail trends.
Other sectors did not fare as well. Sales dropped 1.6% at home-furnishing stores, 1.0% at department stores, 0.9% at sporting goods and hobby stores, and 0.7% at bars and restaurants.
Sales also dipped 0.2% at electronics and appliance stores.
In January, meanwhile, the government said retail sales rose a seasonally adjusted 0.2% instead of 0.1% as originally reported. December’s 0.5% gain was unchanged.
In the past 12 months, retail sales rose an unadjusted 4.6%, more than twice the rate of consumer inflation.
Jeffry Bartash is a reporter for MarketWatch in Washington.
