Retail Sales Increase 0.8% as Consumers Hit Malls, Car Lots

Consumers returned to department stores, shopping malls and automobile dealerships in February, driving retail sales up 0.8% after a winter-related stall, according to government figures released Wednesday.

But analysts cautioned that the rebound did not signal a spending spree, noting that job and income growth has been modest at best for many consumers, who are already burdened by heavy debt.

“There will be enough consumer buying to keep the economy moving ahead at a moderate pace, enough to prevent any kind of a recession . . . but not a splurge,” said Stuart G. Hoffman, an economist at PNC Bank Corp. in Pittsburgh.

Consumer spending represents about two-thirds of the nation’s economic activity.

Much of the February strength came from auto dealerships, where sales shot up 2%, the biggest gain since a 2.7% increase in August, the Commerce Department said. Excluding automobiles, which accounted for a quarter of the overall total, sales rose just 0.4%.

Hoffman said the gain in car sales was due in part to rebates designed to clear showrooms and back lots after an anemic 0.1% increase in January.

The overall retail performance in February was the best since a 0.9% increase in November. Sales had risen 0.7% in December.

Sales totaled a seasonally adjusted $201.1 billion, up from $199.5 billion in January, when they slipped 0.1%, the first decline since September. January sales initially were estimated to have fallen 0.3%.

The sales report, combined with other recent data, adds support to arguments that the economy is growing moderately and does not need the stimulus of further interest rate cuts by the Federal Reserve Board.

Sales of durable goods--products such as cars and carpeting expected to last at least three years--jumped 1.4% in February after falling 0.6% a month earlier. It was the best performance since a 1.9% gain in August.

Hardware and building-materials stores posted a 0.8% gain, while furniture and other home furnishing stores saw sales increase 0.3%.

Sales of nondurable goods such as food and fuel rose 0.4%, twice the 0.2% gain in January.

Department stores rang up a 2.3% sales gain and apparel shops posted a 1.2% advance. Restaurants and bars and drugstores each registered 0.3% increases.

But grocery stores, an often volatile component that saw sales jump 1.1% in January, experienced a 0.8% decline a month later. Service station sales were unchanged, but analysts said that was due to falling prices, not volume.

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Retail Sales

Seasonally adjusted, in billions of dollars:

Feb. 1996: $201.1

Source: Commerce Department