Retail sales fall 0.2 percent in February
Tuesday, March 13th 2001, 12:00 am
News On 6
WASHINGTON (AP) _ After a January buying binge, Americans tightened the belt again in February, pushing sales at the nation's retailers down by 0.2 percent, the first drop in three months.
The weakness was led by a sharp decrease in sales at furniture and home furnishing stores and at bars and restaurants, the Commerce Department reported Tuesday.
But February's drop was exaggerated because it followed a sizzling 1.3 percent increase in sales in January, according to revised figures. That was a much stronger showing than the 0.7 percent rise the government previously estimated one month ago.
Many analysts had been predicting a modest, 0.4 percent sales increase in February.
For months, retail sales have been lackluster as the economy slowed sharply. The exception was January, when they rebounded as merchants deeply discounted merchandise to lure shoppers into stores and malls. Mild weather also helped.
Stock market volatility, higher energy prices, lower consumer confidence and slower job growth all have been factors in making consumers less inclined to spend.
February's 0.2 percent decline was the first drop in sales since November, when they fell by 0.6 percent.
Last week, the nation's big retailers reported generally disappointing sales for February, dimming the outlook for a strong spring.
How consumer confidence holds up during the economic slowdown will be the biggest factor in determining whether the economy will slide into a recession, Federal Reserve Chairman Alan Greenspan has said.
Recession fears eased a bit last week after the government reported the economy added a bigger-than-expected number of jobs in February and the nation's unemployment rate held steady at 4.2 percent.
The Fed, trying to rev up faltering economic growth, cut interest rates twice in January, totaling a full percentage point. Many analysts expect the central bank will reduce rates a third time next week, probably by another half-point.
The rate cuts are designed to lower borrowing costs, which should spur consumer spending and business investment, thus eventually bolstering economic growth.
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. More cautious spending by consumers has been a factor in slower growth.
In February, spending on furniture and home furnishings fell 1.9 percent after a strong 3.1 percent increase the month before. Sales at bars and restaurants declined by 1.5 percent, following a big 3 percent rise.
Car and truck sales rose 0.2 percent, after a solid 1.3 percent gain.
Excluding volatile car and truck sales, which tend to swing widely from month to month, overall retail sales fell by 0.3 percent in February, the worst showing since November.
Sales at gasoline stations fell 0.2 percent, reflecting lower prices at the pump. That was down from a 1.1 percent rise in January. Sales figures are not adjusted for inflation.
Elsewhere in the report, sales at building supply and hardware stores rose 1.6 percent in February after a 0.5 percent rise in January.
At general merchandise stores, including department stores, sales rose a modest 0.3 percent, down from a 1.5 percent increase. Sales at grocery stores increased 0.6 percent, after being flat in January. At clothing stores, sales went up 0.3 percent, down from a 1.2 percent gain.