Sales at U.S. retailers rose in February by the most in five months as an improved job market and stronger household finances cushioned the effect of higher payroll taxes.
The 1.1% advance exceeded all projections in a Bloomberg survey and followed a revised 0.2% gain in January, Commerce Department figures showed today in Washington. The median forecast was for a 0.5% advance. Sales excluding the volatile categories of autos and gasoline rose 0.4%.
Progress in the job market is shoring up sentiment and spurring demand at merchants including Costco Wholesale Corp., easing the burden of a two percentage-point increase in the levy that funds Social Security. The boost to household wealth from home values and stock prices has also helped consumers maintain spending in the face of higher fuel prices.
“It shows some steady underlying strength,” said Terry Sheehan, an economic analyst at Stone & McCarthy Research in Princeton, New Jersey, the second-best forecaster of retail sales in the last two years, according to data compiled by Bloomberg. “These numbers are cause for cautious optimism.”
Stock-index futures erased losses after the figures, with the contract on the Standard & Poor’s 500 Index expiring in June rising less than 0.1% to 1,547.4 at 8:47 a.m. in New York.
Estimates of the 82 economists in the Bloomberg survey ranged from a 0.6% decline to a 1% increase. The reading for January was revised from an initially reported gain of 0.1%.
Eight of 13 major categories showed increases last month, led by a 5% jump in receipts at gasoline stations that reflected higher fuel costs. Sales also climbed at building materials outlets, auto dealers and general merchandise stores.
Spending increased 1.1% at auto dealerships in February after a 0.3% drop a month earlier.
Pent-up demand for motor vehicles contributed to the increase as an aging fleet and cheap borrowing drew customers to dealer lots. Cars and light trucks sold at a faster pace in February, pushing the annualized rate of sales to 15.3 million from 14.4 million a year ago, according to data from Ward’s Automotive Group.
Deliveries at Ford Motor Co. surged 9.3% last month from a year earlier, the best February in six years. At General Motors Co., sales climbed 7.2%, the companies reported March 1.