Retail sales in US rose in February by most in five months

Consumers unfazed by higher gas prices

March 13 (Bloomberg) -- Retail sales in the U.S. rose in February by the most in five months, reflecting broad-based gains that indicate the world’s largest economy is picking up even as gasoline costs climb.

The 1.1% advance matched the median forecast of 81 economists surveyed by Bloomberg News and followed a 0.6% increase in January that was larger than previously estimated, Commerce Department figures showed today in Washington. Demand improved in 11 of 13 industry categories, including auto dealers and clothing stores.

Sales at chains like Gap Inc. and Target Corp. last month beat analysts’ estimates, a sign an improving job market is bolstering consumer spending, the biggest part of the economy. A pickup in payrolls accompanied by limited wage gains may not be enough to satisfy Federal Reserve officials, who today will probably reaffirm a commitment to keep interest rates low.

Consumers are “unfazed by higher gas prices,” said Jonathan Basile, an economist at Credit Suisse in New York, who correctly forecast the increase in spending. “This is a pleasant surprise on the overall picture for the economy. For the Fed, it’s steady as she goes. They will be encouraged, but there is still a long way to go.”

Stock-index futures held earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in June rose 0.4% to 1,372.3 at 8:55 a.m. in New York after German investor confidence increased more than forecast.

Survey Results

Economists’ estimates in the Bloomberg survey ranged from gains of 0.5% to 2.1%. The Commerce Department revised the January increase from a previously reported 0.4% gain.

Sales increased 1.6% at automobile dealers, reversing a 1.6% decrease the prior month, today’s report showed. The results fell short of industry figures that showed an even bigger gain.

Cars last month sold at the fastest pace in four years, led by Chrysler Group LLC and a surprise gain from General Motors Co. Light-vehicle sales accelerated to a 15 million annual rate, the strongest since February 2008, according to Ward’s Automotive Group.

“There are a number of factors that are helping release this pent-up demand,” Don Johnson, vice president of GM’s U.S. sales, said on a March 1 conference call with analysts. “They include stronger employment, good credit availability, and both of those are leading to improving consumer sentiment.”

Excluding Autos

Purchases excluding autos increased 0.9%, today’s report showed, exceeding the median forecast of economists surveyed that projected a 0.7% gain.

The retail sales data, which aren’t adjusted for inflation, reflected a 3.3% jump in receipts at service stations, the biggest gain in almost a year, as gasoline costs climbed. Regular fuel in February averaged $3.56 a gallon, or 18 cents more than January, according to AAA, the nation’s biggest auto organization. It’s advanced further this month, reaching $3.80 on March 11, the highest since May.

Purchases at clothing stores rose 1.8%, the most since November 2010. Furniture and general merchandise stores were the only categories to show a decrease in demand.

Gap, the largest U.S. apparel chain, and Target, the country’s second-largest discount retailer, were among merchants whose February sales gains at stores open at least a year exceeded analysts’ average estimates. Unseasonably warm weather may have helped to spur demand for spring merchandise.

Warmer than Normal

The average temperature was 38.2 degrees Fahrenheit (3.4 Celsius) last month, 3.6 degrees warmer than the 20th century average and the 17th warmest February in 118 years.

Excluding autos, gasoline and building materials, which are the figures used to calculate gross domestic product, sales rose 0.5% after a 1% increase in the previous month.

Employers boosted payrolls more than forecast in February, capping the best six-month streak of job growth since 2006. The 227,000 increase followed a revised 284,000 gain in January that was bigger than first estimated, the Labor Department reported on March 9. The jobless rate held at a three-year low of 8.3%.

Fed policy makers may reiterate a plan to keep interest rates low at least through late 2014 after meeting later today. Chairman Ben S. Bernanke, in his semiannual monetary policy report to Congress, said maintaining monetary stimulus is warranted even with employment gains and a lower jobless rate.

While there are “some positive developments in the labor market,” Bernanke told lawmakers on March 1, “the pace of expansion has been uneven.” The rise in gasoline prices “is likely to push up inflation temporarily while reducing consumers’ purchasing power,” he said.

Bloomberg News

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