Retail Sales Stage Unexpected ReboundBy Reuters - | Posted 2008-02-13 Print
Sales at retailers unexpectedly rose 0.3
percent in January, partly reflecting stronger sales of new cars and
gasoline, according to a Commerce Department report.
WASHINGTON (Reuters) - Sales at retailers unexpectedly rose 0.3 percent in January, partly reflecting stronger sales of new cars and gasoline, according to a Commerce Department report on Wednesday.
January's sales increase followed a 0.4 percent decline in December and was contrary to Wall Street analysts' forecasts for a 0.2 percent decline. The surprise sales rise caused stock futures to jump on hopes it meant the United States had a better chance of skirting a recession.
Prices for U.S. debt securities fell while the dollar's value strengthened against other major currencies.
Excluding autos, January sales still rose 0.3 percent, reversing a 0.3 percent decline in December sales. Wall Street analysts were expecting a 0.2 percent gain in sales excluding autos.
"The data is clearly a surprise to the upside," said Omer Esiner, a market analyst with Ruesch International in Washington, D.C. "In the near term, it does ease some recession concerns."
Despite the higher headline number for sales, there were declines in many categories that implied consumer spending was being pinched. Furniture sales fell 0.5 percent in January, building material sales were down 1.7 percent and department store sales declined by 1.1 percent.
Many analysts think the slowing U.S. economy faces increasing risks of tumbling into recession and are closely watching for signs that consumers, who fuel 70 percent of national economic activity, will keep scaling back spending.
Jim Awad, chairman of W.P. Stewart & Co. Ltd. in New York, said that while the January sales numbers will raise hopes that a recession can be avoided, it may be short-lived because of other indications that consumers are facing pressure as housing prices fall.
"After the impulsive positive buying, people will say this is subject to revision and it's inconsistent with other incoming data indicating softness and weakness in the economy," Awad said.
Gasoline sales rose 2 percent in January after being flat in December, but analysts said that likely reflected higher prices, not stronger demand.
Excluding gasoline, January retail sales rose 0.1 percent.
A separate report showed mortgage applications fell last week from highest level in nearly four years as mortgage rates rose.
MORTGAGE APPLICATIONS DECLINE
In a separate report, the Mortgage Bankers Association said its home loan application index fell 2.1 percent in the week ended February 8 as both home purchase and refinance applications slipped.
Applications for home refinancing had been particularly strong over the past month as average 30-year mortgage rates slumped as low as 5.49 percent in mid-January. Last week however, rates rose by 0.11 percentage point to 5.72 percent.
(Additional reporting by Lynn Adler, Gertrude Chavez and Ellis Mnyandu in New York, )
(Reporting by Glenn Somerville, editing by Joanne Morrison)
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