Lured into stores by deep discounts and better
weather, Americans pushed up sales at the nation's retailers in
January by a strong 0.7 percent, the biggest jump in four months.
The Commerce Department's report Tuesday showed that the advance
was fairly widespread with shoppers snapping up building supplies,
home furnishings, clothes and cars. They even ate out more.
January's performance was better than the 0.5 percent gain many
analysts were forecasting and was the best showing since an 0.8
percent rise in September. In December, retail sales rose a tiny
Retail sales have been lackluster over the last several months
as the economy has slowed sharply. Lower consumer confidence, stock
market volatility and higher energy prices were big factors in
making consumers feel more inclined to tighten their belts. To cope
with the economic slowdown, some of the nation's biggest names,
including Sears and J.C. Penney, have announced store closings.
The Federal Reserve, in deciding to cut interest rates again
last month, said it was specifically worried about a further
erosion in consumer and business confidence. The Fed cut interest
rates twice in January by a half percentage point each, in an
effort to prevent the faltering economy from sliding into a
The rate cuts are designed to lower borrowing costs, which
should spur consumer spending and business investment, thus
eventually bolstering economic growth.
The economy grew at a 1.4 percent annual rate in the fourth
quarter, the weakest pace in more than five years. Fed Chairman
Alan Greenspan has said current growth is probably "very close to
Consumer spending accounts for two-thirds of all economic
activity and was an engine of the economy's sizzling growth during
the first half of 2000.
In January, sales of furniture and home furnishings rose 1.5
percent, following a 0.9 percent drop the month before. Building
supplies and hardware sales grew by 1.1 percent, up from an 0.8
Sales at gasoline stations went up by 2.5 percent, reflecting
higher prices at the pump. That followed a 2.8 percent decline in
December as gasoline prices eased a bit. Sales are adjusted for
seasonable variations but not for inflation.
New car and truck sales rose 0.6 percent in January, up from a
0.4 percent increase. Car-makers have been particularly hard hit by
the economic slowdown, laying off thousands so companies can trim
inventories which have piled up because of slumping demand.
Excluding volatile auto sales, retail sales rose by a strong 0.8
percent, better than analysts expected and the best performance
since July. In December, overall sales excluding autos were flat.
At clothing stores, sales rose 0.9 percent in January, following
a 0.7 percent gain, and at general merchandise stores, including
department stores, sales grew by 0.7 percent, a big improvement
over December's 0.4 percent decline.
Bars and restaurants reported a 1 percent jump in sales, more
than double the 0.4 percent rise in December. Drug stores showed a
1.7 percent increase in sales after a 0.3 percent drop.
The sole weak spot in Tuesday's report: sales at grocery stores
fell by 0.2 percent, but that followed a big 1 percent jump in
Last week, the nation's largest retailers reported
better-than-expected sales in January due mostly to big winter
clearance sales. Given that, some industry analysts didn't
interpret those gains as a sign that consumers will keep buying and
help boost the economy in the months ahead.