Big upward revision to January shows sales much better than expected
U.S. retail sales began the year much stronger than expected, according to Commerce Department figures released Thursday.
Retail sales dropped 0.1% in February, better than the 0.4% decline expected by economists surveyed by MarketWatch. January's sales gain was revised much higher, to a 1.8% gain from the 1% increase estimated a month ago.
Sales are down 8.6% in the past year and had declined for a record six straight months before January's surprising gain.
Auto sales sank 4.3% in February, after automakers reported their worst sales month in a generation. Excluding autos, retail sales rose 0.7% in February after an upwardly revised 1.6% gain in January. Economists expected sales excluding autos to rise 0.2%.
Inflation accounted for some of the strength of sales in February. Gasoline station sales rose 3.4% on a 7% increase in retail gasoline prices.
Sales excluding both gasoline and autos rose 0.5% in February
Retail sales account for about a third of final demand in the economy.
The surprising gain in retail sales in the first two months of the year could force economists to rethink their estimates of how fast the economy is contracting in the first quarter of the year. Currently, the median forecast for gross domestic product in the quarter is for a 5.2% annualized decline after a 6.2% drop in the fourth quarter.
Consumers are facing severe budget constraints, with their wealth declining rapidly and credit increasingly harder to get. Poor job prospects are holding back consumers from buying durable goods, such as autos or furniture. But consumers are also benefiting from disinflation.
Despite the surprising strength in the first two months of the year, retail sales are down 10.3% compared with the first two months of 2008.
Details
Auto sales dropped 4.3%, the biggest decline since October. Motor vehicle sales were down 23.5% compared with a year earlier.
Sales of other durable goods were stronger. Sales at furniture stores rose 0.7%. Sales at electronics and appliance stores rose 1.2%.
Sales at hardware stores fell 0.2%.
Sales at general merchandise stores jumped 1.3% following a 1.1% gain in January. Sales at department stores rose 1.1%.
Sales at clothing stores rose 2.8% after a 4.9% gain in January.
Sales at stores catering to leisure-time activities, such as reading and sports, rose 0.2%.
Sales at food and beverage stores fell 0.7%. Sales at restaurants and bars fell 0.2%.
Sales at gas stations rose 3.4% in February and were down 32.3% compared with last February.
Sales at health and personal care stores rose 0.6%.
Sales at nonstore retailers, such as online stores and catalogs, rose 0.3%.
