US February retail sales rise 1.1% but largely on gasoline costs

13 March 2013 16:03  [Source: ICIS news]

WASHINGTON (ICIS)--US retail sales rose by an unexpectedly strong 1.1% in February from January, the Commerce Department said on Wednesday, but much of that gain was attributed to a sharp 5% jump in gasoline sales that reflects higher fuel prices.

In its monthly report, the department said that overall retail sales in February were at a seasonally adjusted $421.4bn (€324.5bn).

As well as being 1.1% ahead of January’s retail sales, the February figure also marked a 4.6% improvement on the pace seen in February 2012.

Retail sales are seen as a key, real-time market measure of consumer confidence. That in turn is crucial for the overall US economy because consumer spending accounts for as much as 70% of its commercial activity and production.

However, February’s solid 1.1% gain in retail sales does not necessarily signal renewed consumer confidence.

Because last month’s advance in retail sales in part reflects the 5% increase in consumers’ spending on gasoline, which could simply mean greater consumption, it also suggests that February's sharp increase in fuel prices was a major and even primary influence.

According to the Energy Department, at the beginning of February, US gasoline prices averaged $3.60/gal, but they rose quickly by $0.22/gal and averaged $3.83/gal at the end of the month, a 6.2% increase.

The Commerce Department data show that, in contrast to the higher gasoline sales, consumer purchases in other main categories declined last month.

For example, retail sales of furniture and home furnishings fell by 1.6% from January, sporting goods sales were down by 0.9%, general merchandise was off by 1%, food services sales (restaurants and bars) were down by 0.7% and sales of electronics and appliances declined by 0.2%.

Retail sales of automobiles and parts, however, rose by 1.1%, as did sales of building and gardening supplies.

($1 = €0.77)

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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