Retailers see sales increase by 0.3%

February’s spurt first in 3 months

Shoppers walk outside the Atlantic Terminal Mall in the Brooklyn borough of New York, U.S., on Friday, March 7, 2014. The U.S. Census Bureau is scheduled to release retail sales figures on March 13. Photographer: Craig Warga/Bloomberg
Shoppers walk outside the Atlantic Terminal Mall in the Brooklyn borough of New York, U.S., on Friday, March 7, 2014. The U.S. Census Bureau is scheduled to release retail sales figures on March 13. Photographer: Craig Warga/Bloomberg

WASHINGTON - Retail sales rose in February for the first time in three months, a sign consumers are starting to shake off the effects of the harsh weather that had curbed spending even more than previously estimated.

The Commerce Department said Thursday that seasonally adjusted retail sales rose 0.3 percent in February. Spending had fallen 0.6 percent in January, revised down from the 0.4 percent decline initially reported. Retail spending also fell 0.3 percent in December.

The increase suggests that consumer spending has started to recover after being tempered by snowstorms and low temperatures that blanketed much of the country.

“We’ll see a little bit more traction on the consumer side as the weather improves and people get a little bit more willing to leave the house,” said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit. “There is building pent-up demand across the economy.”

Auto sales rose 0.3 percent. Excluding volatile spending on autos, gas and building supplies, retail sales increased 0.3 percent.

Last month’s rebound almost brought retail spending back to its December levels. Purchases at restaurants, online retailers and department stores also improved, although the economy has yet to fully shake off winter’s impact.

Over the past 12 months, retail sales have risen a modest 1.5 percent.

The retail report offers a first look at February’s consumer spending, which accounts for about 70 percent of all economic activity. Many economists went into 2014 projecting that stronger consumer spending would cause growth to accelerate, only to find those estimates frustrated by the freezing weather across much of the country.

The February employment report also suggested that the overall economy has recovered momentum. Employers added 175,000 jobs last month after weak gains in the previous two months.

But the improvement in retail spending has not led yet to more work at stores. Retailers cut 4,100 jobs in February. The losses were concentrated in electronics, department, sporting goods, hobby, book and music stores.

Separate sales reports by auto companies indicate that consumer demand may improve in the spring. Consumers bought just under 1.2 million new cars and trucks in February, according to motor-vehicle-makers. That follows a 3 percent drop in January - the first year-over-year decline since August 2010.

General Motors, Ford and Toyota each reported sales declines for February. The country’s top three automakers said sales began to recover in the second half of last month, when the weather improved.

So far this year, new-vehicle sales have been on pace to reach a little more than 15 million for the year. In 2014, the industry sold 15.6 million cars and trucks. Economists forecast that auto purchases will approach 16 million this year.

Another report Thursday showed the number of applications for unemployment insurance payments unexpectedly dropped last week, reaching the lowest level since late November.

The number of people seeking U.S. unemployment benefits dropped 9,000 last week to a seasonally adjusted 315,000, its lowest level in three months. It was the second-straight decline, and it added to evidence that the job market is picking up after a winter slump.

The Labor Department said Thursday that the four-week average of applications, a less volatile figure, fell 6,250 to 330,500, the lowest point since early December.

Applications are a rough proxy for layoffs. The declines indicate that most companies are confident enough about consumer demand to avoid layoffs.

U.S. businesses continued to restock their shelves and warehouses in January, but sales plunged during the snowstorm plagued month.

Inventories rose 0.4 percent after a 0.5 percent increase in December, the Commerce Department said Thursday. But sales dropped 0.9 percent in January after a 0.1 percent decrease the previous month, putting sales back near September 2013 levels.

The report suggests that winter weather kept shoppers at home. But businesses anticipate a rebound because they expanded their inventories to meet expected demand in the months ahead.

Still, there is a possible danger to economic growth: When companies build their stockpiles as their sales fall, they may end up stuck with more goods than they need.

That potentially forces them to lower prices and sell at discounts in order to clear the extra inventory.

Information for this article was contributed by Josh Boak and Chrisopher S. Rugaber of The Associated Press and by Victoria Stilwell of Bloomberg News.

Business, Pages 29 on 03/14/2014

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