Business

US retail sales rose moderately in February; January corrected sharply higher According to Reuters



© Reuters. FILE PHOTO: Shoppers carry bags of purchased merchandise at the King of Prussia Mall, the largest retail shopping space in the United States, in King of Prussia, Pennsylvania, U.S., December 8, 2018 REUTERS / Mark Makela / File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. retail sales rose moderately in February as more expensive gasoline and food forced households to cut spending on other items such as furniture, electronics and appliances. this could stifle economic growth this quarter.

However, a report from the Commerce Department on Wednesday showed that sales recovered in January much stronger than initially estimated. Record-high gasoline and food prices are hitting low-income households hardest.

Overall, consumers are being comforted by the massive savings accumulated during the COVID-19 pandemic. Labor shortages with near-record job openings are boosting wages and allowing Americans to work overtime to boost earnings.

“Despite cooling off after the January splash, US consumers appear to be in a logical position to keep spending,” said Sal Guatieri, senior economist at BMO Capital Markets in Toronto. supported by recent large job gains and high household savings,” said Sal Guatieri, senior economist at BMO Capital Markets in Toronto.

“This assumes, of course, that there are no further major blows to fuel and food costs, confidence and financial conditions stemming from the Russo-Ukrainian war.”

Retail sales rose 0.3% last month. The data for January has been revised higher to show sales up 4.9% instead of 3.8% as previously reported. Economists polled by Reuters had forecast retail sales growth to slow to 0.4%, with estimates ranging from a 0.7% decline to a peak of 1.7%.

Retail sales rose 17.6% from a year ago. A moderate monthly gain in retail sales before the Federal Reserve’s rate hike is expected late Wednesday, the first in just over three years.

Retail sales are primarily made up of goods and are not adjusted for inflation. Last month, sales at auto dealerships rose 0.8 percent. The increase may reflect higher prices amid tight shortages, as manufacturers of motor vehicles reported falling vehicle sales last month. Auto sales rose 6.9% in January.

The rate of collection at service stations increased by 5.3%. Gasoline prices rose 24 cents to an average of $3.49 a gallon in February from January, according to data from the US Energy Information Administration. They have since surged to record highs above $4 a gallon following Russia’s invasion of Ukraine on February 24. The war has also boosted wheat prices, which could keep food prices in high level.

US stocks opened higher amid signs of progress in Ukraine-Russia peace talks. The dollar fell against a basket of currencies. US Treasury yields rose.

POWER BELOW

Sales at furniture stores fell 1.0%. Consumers also cut spending at health and personal care stores, with sales falling 1.8%. Sales at non-store retailers fell 3.7%. Bills at electronics and appliance stores fell 0.6%.

But consumers spent more on clothing as well as on sporting goods, hobbies, musical instruments and books. Sales at restaurants and bars rebounded 2.5%. Restaurants and bars is the only service category in the retail sales report.

Excluding autos, gasoline, construction materials and food services, retail sales fell 1.2% in February. The data for January has been revised higher sharply to show this so-called core retail sales recovered 6.7% instead of 4.8% as previously reported.

Core retail sales correspond most closely to the consumer spending component of gross domestic product. An upward revision to January’s core retail sales offset the decline in February, which could keep consumer spending trending moderate in the first quarter.

The Russia-Ukraine war, which is also expected to further strain supply chains, prompted economists at Goldman Sachs (NYSE:) last week to reduce their gross domestic product growth estimates for first quarter to 0.5% annualized from 1.0% pace. . The economy grew strongly at 7.0% in the fourth quarter.

A recession is not predicted this year as consumers are saving about $2.5 trillion. Employment at the end of January hit a record level of nearly 11.3 million.

“The U.S. economy is still likely to continue to grow, albeit at a slower pace that was possible at the start,” said Bill Adams, chief economist at Comerica Bank (NYSE: Bank) in Toledo, Ohio. five.



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