Monthly increase in spending is lowest since last summer
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — Sales at U.S. retail stores rose in January for the seventh straight month, but the increase was the lowest since last summer, government data showed Tuesday.
Retailers’ sales rose 0.3% last month as consumers spent more on gasoline, autos and online goods, the Commerce Department reported. Read government’s report here.
Sales also rose 0.3% on the month excluding the volatile automotive sector.
The increase in sales fell short of Wall Street’s expectations, however. Economists surveyed by MarketWatch had forecast sales to rise by 0.6% overall and by 0.6% excluding the auto segment, in which sales often register sharp month-to-month swings and can muddy underlying retail trends.
The government also revised sales data for December 2010 lower — to a 0.5% increase from 0.6% as originally reported.
In premarket trading, U.S. stock futures trended modestly lower in the aftermath of the data. See more on investors’ reaction to a heavy plate of Tuesday economic data.
Retail sales are closely watched by investors and economists for signs of whether the economy is growing or shrinking. Consumer spending is by far the largest contributor to the nation’s economy.
Large-scale retailers such as Macy’s Inc. (M 23.89, +0.02, +0.08%) and some specialty stores benefited earlier in January from post-holiday sales events before winter storms kicked in later in the month. A one-year reduction in worker payrolls taxes also gave consumers a bit more money to spend.
Yet spending fell at clothing and building-supply stores. Consumers also spent less at bars and restaurants and bought fewer leisure items such as books, music and sporting goods.
Economists say the economy has to add more jobs and wages have to rise to sustain the momentum in consumer spending. Yet companies are reluctant to hire unless they believe demand for their goods and services will keep rising. That’s why the U.S. unemployment — 9.0% in January — has remained so stubbornly high.
The biggest increase in retail sales last month occurred at gas stations, which isn’t a good thing for most consumers since it reflects higher fuel prices. Sales at gas stations rose 1.4%, following a 1.8% increase in December.
Sales also rose by 1.3% at grocery and liquor stores, by 1.2% at online and catalog stores, and by 0.5% apiece at auto dealers, department stores, and health and beauty shops.
January’s sales fell 2.9% at building-supply stores and declined 1.3% for retailers who sell hobby items, sporting goods, books and music.
Restaurants and bars also saw a 0.7% decline in sales — the biggest drop since March 2009.
Sales data reported by the government are collected from polls sent to up to 5,000 firms that account for two-thirds of all U.S. retail purchases.
