February Retail Sales Climb Most in Five Months
Retail sales grew at the fastest pace of the past five months in February as workers spent more on cars, clothing and other goods.
Sales rose a seasonally adjusted 1.1% to $407.8 billion according to data released this morning by the U.S. Commerce Department. Sales rose the most at gas stations, climbing 3.3% from January, auto dealerships, up 1.9%, and clothing, which rose 1.8%.
Warm weather may explain some of the increasing sales as customers have spent an estimated $629 per bill less on natural-gas heating according to the Energy Information Administration. There was a second consecutive month of 1.4% increases in receipts of building materials and garden equipment and supplies.
Buyers may also have been updating their spring wardrobe, as clothing sales increased 1.8% in February and 7.3% from a year ago. Increasing gas prices, an average of 20 cents per gallon higher than January, may explain the 3.3% increase in sales.
The 7.1% increase in auto dealership sales may be fueled by pent up demand as the economy improves and more cars become available. Last year vehicles manufactured in Asia were hampered by the March tsunami in Japan and October floods in Thailand. The largest decline was in sales at furniture and home furniture stores, dropping 1.2% from January.
January sales were revised higher to 0.6% from the 0.4% originally reported.
Wages have risen slightly as the U.S. economy has added an average of 245,000 jobs each month since December, allowing consumers to spend more and propel stronger economic growth. Unemployment has stayed at 8.3% for the past two months. The Federal Reserve anticipates unemployment between 8.2% and 8.5% until the end of the year.
The Federal Reserve will meet later today and is expected to keep interest rates at their present historic low levels. The Fed does not anticipate an increase in inflation with the current high unemployment rate. The Labor Department will release inflation data later this week.
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