Retail sales rise 0.3% in January

An unexpected rise in retail sales during January boosted hopes the United States might avoid recession despite the pressure that a weakening housing market is putting on consumers’ pocketbooks.

The Commerce Department said Wednesday that sales at U.S. retailers rose 0.3% in January to $382.91 billion on higher sales of new cars, gasoline and clothing.

That was sharply contrary to Wall Street analysts’ forecasts for a 0.2% drop and helped soothe economic worries that had been driven in part by a surprise 0.4% fall in December.

Analysts were skeptical about some portions of the report, especially its indication of stronger new-car sales, but said it nonetheless showed that consumers still were willing to buy.

“As the consumer goes, so goes the economy,” said economist Joel Naroff of Naroff Economic Advisors in Holland, Pa. “It appears the consumer may have slowed down, but not left the field of battle.”

That eases fears that the economy might already be in a downturn.

“The report strengthens the case of those who think we’ll skirt a recession,” said Jim Awad, chairman of W.P. Stewart & Co. in New York.

Awad cautioned, however, that the optimism might be short-lived.

The department said car sales rose 0.6% last month -- a figure that some private-sector analysts regarded as suspect and said might be revised in coming months.

“This is completely at odds with auto industry data, which reported a 5.6% drop in overall unit sales in January,” said Brian Bethune, an economist with Global Insight in Lexington, Mass.

Excluding autos, sales were still up 0.3%, reversing a 0.3% fall in December. Wall Street analysts were expecting a 0.2% gain in sales excluding autos.

Despite the higher headline number for sales, there were declines in many categories, which implied that consumer spending was being pinched. Furniture sales fell 0.5%, building material sales were down 1.7% and department store sales declined by 1.1%.

The retail sales report showed gasoline sales up 2% in January after being flat in December, but analysts said that likely reflected higher prices, not stronger demand. Excluding gasoline, sales rose 0.1%.

Many analysts think the economy is at risk of tumbling into recession and are closely watching for signs that consumers, who fuel 70% of national economic activity, will continue to scale back spending.