Sales at highest level in four months; discounts underpin auto sales
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — U.S. retail sales rose in January by the most in four months as Americans increased spending at department stores, general stores and bars and restaurants, government data showed Tuesday.
Sales at retailers increased a seasonally adjusted 0.4% on the month, the Commerce Department reported. That fell short of the MarketWatch forecast for a 1.0% gain, however, mainly because of lower automobile sales.
Even though the annual rate of autos sold last month reached the highest level in nearly three years, auto makers may have offered sharp discounts. Revenue from those sales fell 1.1% to an estimated $71.7 billion from $72.5 billion in December, seasonally adjusted.
Yet most retailers actually saw a boost in sales, suggesting broader strength in the U.S. economy.
Excluding the auto sector, retail sales rose 0.7% to match the MarketWatch forecast of economists. That was the highest level in 10 months.
Consumer spending accounts for as much as 70% of U.S. growth, so an uptick in retail sales is encouraging, economists say. An acceleration in hiring — the U.S. has added about 1 million jobs in the past six months — means there more income available for spending.
As a result, retail sales are 5.8% higher compared to one year ago, and they’ve increased 6.3% in the past three months.
Still, some economists question whether consumers can continue to spend at their current pace. Americans drew down their savings toward the end of 2011 to pay for cars and other purchases. If they start to rebuild their savings, spending could tail off in the early part of the new year.
That did not appear to be the case in January, however.
General-merchandise stores reported a 2% increase in January sales to lead the way, while sales at department stores climbed 1.0%
Sales also rose by 1.3% at bars and restaurants and by 1.1% at shops that sell books, music and sporting goods.
Gasoline stations reported a 1.4% increase in sales, but that’s not good for consumers since it reflects the rising cost of filling up at the pump. It was the biggest increase in 10 months.
Meanwhile, sales sank 1.1% at Internet and mail-order retailers, marking the biggest drop in almost three years. And sales for January fell slightly at health stores and home-furnishing outlets.
Jeffry Bartash is a reporter for MarketWatch in Washington.
