By: Shobhana Chandra
This originally appeared on bloomberg.com, see full story
Sales at U.S. retailers in February fell less than forecast and January’s gain was almost double the previous estimate, indicating the biggest part of the economy may be starting to stabilize.
Purchases decreased by 0.1 percent, led by the slump in demand for cars, following a revised 1.8 percent jump in January, the Commerce Department said today in Washington. Excluding automobiles, sales unexpectedly climbed 0.7 percent.
After tumbling at the fastest pace in three decades, consumer spending may stop hemorrhaging in coming months as a drop in fuel costs and tax cuts put more money in Americans’ pockets. Still, mounting unemployment and falling home and stock values make sustained gains in purchases unlikely until late 2009, economists said.
“People are responding to discounting” as companies seek to get rid of surplus inventory, Roger Kubarych, chief U.S. economist at UniCredit Global Research in New York, said in a Bloomberg Television interview. “In order to have a sustained increase in personal consumption, wealth has to go up.”
Jobless Claims
A separate report today showed claims for unemployment insurance rose to 654,000 last week from 645,000 the previous period, the sixth straight week above 600,000.
Sales were projected to fall 0.5 percent in February after an originally reported 1 percent gain the prior month, according to the median estimate of 77 economists in a Bloomberg News survey. Forecasts ranged from a gain of 1 percent to a decline of 1.5 percent.
Excluding automobiles, last month’s gain followed a 1.6 percent jump in January that also exceeded the government’s previously estimated 0.9 percent increase. Such purchases were forecast to decrease 0.1 percent, according to the survey median.
Sales at automobile dealers and parts stores slumped 4.3 percent, the most since October.
Wal-Mart Lure
Wal-Mart, the world’s largest retailer, reported a 5.1 percent gain in February sales at stores open at least a year. Consumers, trying to make ends meet as job losses mount, are being drawn to its lower prices on groceries, fuel and electronics.
Retailers reporting sales declines in February included Macy’s Inc. and J.C. Penney Co., clothing chains Gap Inc. and Abercrombie & Fitch Co., and luxury sellers Nordstrom Inc. and Neiman Marcus Group Inc., company announcements showed.
The rest of the year will be “very difficult,” Dallas- based Neiman’s Chief Executive Burton Tansky said in a conference call with analysts yesterday. The retailer is canceling orders, returning goods to vendors and cutting expenses, Tansky said.
