Retail sales in the U.S. rose in February for the first time in three months, a sign consumers are starting to shake off the effects of the harsh weather that curbed spending even more than previously estimated.
The 0.3 percent advance followed a 0.6 percent drop in January that was larger than initially reported, Commerce Department figures showed today in Washington. The median forecast of 84 economists surveyed by Bloomberg called for a 0.2 percent advance. The rebound in demand was broad-based with nine of 13 major categories showing increases.
Americans ventured out to shop even as colder-than-normal temperatures and severe snowstorms blanketed parts of the U.S., showing the economic expansion is regaining momentum. Continued improvement in the labor market and gains in wages will be needed to sustain household purchases that are being spurred by rising stocks and home values.
“Consumer confidence has been pretty resilient throughout this entire period,” Guy Berger, an economist at RBS Securities Inc. in Stamford, Connecticut, said before the report. “Equities have been up a little bit for the year, so the wealth effects are still relatively favorable.”
Estimates in the Bloomberg survey ranged from a 0.2 percent drop to a 0.6 percent gain. The reading for January was revised down from an initially reported 0.4 percent decrease. December sales were also weaker, now showing a 0.3 percent drop compared with a previously reported 0.1 percent decrease.Fewer claims
Another report today showed the number of applications for unemployment insurance payments unexpectedly dropped last week, reaching the lowest level since late November. Claims for jobless benefits declined by 9,000 to 315,000 in the week ended March 8, according to figures from the Labor Department.
The gains in retail sales last month were led by non-store retailers, which include Internet stores, indicating some customers were still struggling with poor weather and preferred to shop from the comfort of home. The category that includes purchases made online climbed 1.2 percent in February, the most since July 2013.
Other areas showing gains in February included sporting goods, where purchases increased 2.5 percent, and department stores, which showed a 0.7 percent gain. Both advances were the biggest since January 2013.
The South Atlantic region of the U.S. experienced the most snowfall during the second week of February since 1983 and New England registered the most in 20 years during the period, according to weather-data provider Berwyn, Pennsylvania-based Planalytics Inc. said. February’s winter blitz followed the chilliest January in three years.Silver lining
While the cold and snow have depressed auto deliveries this winter, there was a silver lining for some dealers: booming sales of all-wheel drive models. In February, when industrywide sales were little changed, Subaru sales climbed 24 percent and Jeep deliveries jumped 47 percent.
Cars and light trucks sold at a 15.3 million annualized pace in February compared with a 15.2 million rate in January, according to data from Ward’s Automotive Group.
Sales at Ford Motor Co., the second-largest U.S. automaker, declined 6.1 percent for the same month last year, more than the 5.3 percent drop estimated by analysts.
“It has been an interesting start to the year with the weather,” said John Felice, U.S. sales chief for Dearborn, Michigan-based Ford, in a March 3 conference call. He added that areas of the country that weren’t hit by the harsh winter weather saw strong demand.Spring back
“While it’s difficult to determine how much of that pent- up would carry into March, I think it was a solid month in an industry basis and we expect heading into the month of March being a very solid spring market,” Felice said.
The retail sales figures used to calculate GDP, which exclude categories such as food services, auto dealers, home- improvement stores and service stations showed a 0.3 percent increase in February after a 0.6 percent drop the prior month that was also larger than previously estimated, today’s report showed.
More jobs, higher home prices and strong equity returns may be giving consumers the means to spend, with household wealth rising by $2.95 trillion in the fourth quarter to a record $80.7 trillion, according to data from the Federal Reserve.
Payrolls grew by 175,000 jobs in February, a sign the economy is starting to shake off the effects of severe winter weather that has slowed growth at the start of the year.Shares rebound
Standard Poor’s 500 index climbed 4.3 percent in February, erasing its January drop, while the S/Case-Shiller index of property values in 20 cities rose 13.4 percent in the year ended December, the latest month for which data is available.
Businesses predicting that warmer weather will also bring a boost in sales include Macy’s Inc., which in January revealed plans to eliminate about 2,500 jobs as it shutters five stores.
“February started off like here we go again,” chief executive officer Terry Lundgren said March 11 at the Bank of America Merrill Lynch Consumer Retail Conference. “All of a sudden, Valentine’s Day came and the business turned and also the weather began to normalize and not everywhere, but in certain parts of the country, and when it did, the business came right back.”
Reduced fiscal drag this year and continued improvement in the job market probably may lift GDP once the effect of unusually harsh weather dissipates.
Federal Reserve Chair Janet Yellen last month said the central bank is likely to keep trimming asset purchases, even as it monitors recent reports to “try to get a firmer handle on exactly how much of that set of soft data can be explained by weather and what portion, if any, is due to softer outlook.”
Policy makers anticipate that “economic activity and employment will expand at a moderate pace this year,” she said to the Senate Banking Committee on Feb. 27.