People are stocking up on the essentials- Retail Sales Up

Retail sales rose an unexpected 1% last month. Due to what? People buying food and clothes.




Feb. 12 (Bloomberg) -- Sales at U.S. retailers unexpectedly halted a record six-month slide in January, an advance that may not be sustained as job losses climb.

The 1 percent increase followed a 3 percent drop the prior month, the Commerce Department said today in Washington. Excluding cars, the gain was 0.9 percent. Last month’s rise reflected higher gasoline prices and more spending on items including clothing and food.

“There were enough post-holiday sales to lure people into the stores; the question is whether that is sustainable -- and the answer is, obviously not,” said Tom Porcelli, a senior economist at Castlestone Management Ltd. In New York. A “collapsing’ job market means spending will deteriorate further, he said.

Separate figures today showed the number of Americans collecting unemployment benefits reached a record 4.8 million two weeks ago, reinforcing the threat to spending. Economists anticipate household purchases will tumble further in the first half of the year, underscoring the case for the $789 billion stimulus package under debate in Congress.

Stock-index futures initially pared losses after the retail- sales report was released, then resumed their decline. Contracts on the Standard & Poor’s 500 Stock Index fell 1.6 percent to 818 at 9:19 a.m. in New York. Treasuries were little changed, with yields on benchmark 10-year notes at 2.76 percent.

Economists’ Forecasts

Retail sales were projected to fall 0.8 percent after an initially reported 2.7 percent drop the prior month, according to the median estimate of 72 economists in a Bloomberg News survey. Forecasts ranged from a decline of 2.2 percent to a 0.7 percent gain.

Sales excluding automobiles were forecast to decrease 0.4 percent from the prior month, according to the survey median.

The figures aren’t adjusted for inflation, so price increases can influence the data. The average cost of a gallon of regular gasoline last month rose by 10 cents to $1.78 a gallon, according to AAA.

Receipts at filling stations increased 2.6 percent in January, the first gain in six months, following a 16 percent decline in December.


[link to www.bloomberg.com]