Retail sales post biggest gain in 4 months

Updated 2h 42m ago |

WASHINGTON (AP) — American shoppers snapped up new cars, clothing and electronics gadgets in February, pushing retail sales up for the eighth straight month.

Retail sales rose 1% last month, the Commerce Department reported Friday, the biggest gain since October. Part of the gain reflected higher prices for gasoline. Still, excluding sales at gas stations, retail sales rose a solid 0.9%.

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February's jump in sales followed an upward revision to January's data that showed a 0.7% increase. That was more than double the original estimate.

Sales totaled $387.1 billion, up 15.3% from the recession low reached in December 2008. A Social Security tax cut and rising employment will likely encourage consumers to spend more this year.

Consumer spending is closely watched because it accounts for 70% of economic activity.

Auto sales led the increase, rising 2.3% in February. Dealers have been enjoying stronger demand in recent months as the economy improves and more people find jobs.

The major automakers offered discounts last month and that gave added momentum to sales. All the major car companies reported double-digit gains for February.

Higher oil prices also pushed sales up. Gas station sales climbed 1.4%, the biggest jump since December.

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Better weather brought people back to department stores. Sales rose 1%, a rebound from a 0.4% drop in January when winter storms kept people from shopping.

Online shopping, which had benefited from the bad weather in January, showed a 0.3% dip in February.

Sales at electronics and appliance stores rose 0.9% in February after falling 0.2% in January.

Sales at specialty clothing stores rose 0.8%. Sales at hardware stores bounced back in February, rising 0.6% after having fallen 1.3% in January, a reflection of the severe weather.

In another economic report,U.S. businesses added to their stockpiles in January for a 13th consecutive month and total sales rose by the largest amount in 10 months.

Business inventories rose 0.9% in January, the Commerce Department said Friday. Sales for all businesses at the manufacturing, wholesale and retail level increased 2%, the seventh consecutive gain and the largest since March. Healthy gains in sales and inventory restocking should translate into strong orders for U.S. factories.

The string of increases in inventories pushed stockpiles to $1.45 trillion in January. That's a level that economists consider to be healthy for this stage of the recovery. It's 10.1% higher than the recent low of $1.32 trillion reached in September 2009.

Manufacturing has helped to lead the economic recovery. Economists expect that will continue as long as businesses are seeing strong demand. A separate report Friday said sales at the retail level posted a solid 1% gain in February.

In January sales were up at all levels of business, led by a 3.4% jump in demand at the wholesale level.

The rise in inventories in January followed a 1.1% increase in December. Manufacturers boosted their stocks by 1.3% while wholesale inventories rose 1.1% and retailers increased their stockpiles 0.4%.

The big gain in sales pushed the ratio of inventories to sales down to 1.23, matching the record low set last April. That means it would take only 1.23 months to exhaust inventories at the January sales pace.

The lean level of inventories in relation to sales is another good sign that factory production should be headed higher in coming months. ... ales_N.htm