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Retail Post Biggest Jump in Four Months
By Jeannine Aversa   Associated Press
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WASHINGTON — 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 0.1 percent.

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 recession.

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 zero."

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 percent gain.

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 December.

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.

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