Retail Sales in January Weaker Than Expected

Sales by U.S. retailers barely nudged up in January and were weaker than previously thought as 1997 ended, the government reported Thursday, a sign that consumers were growing wary about economic slowing.

Sales rose a weaker-than-expected 0.1% to a seasonally adjusted $214.76 billion last month. That followed revised gains of 0.3% in December and 0.1% in November, previously reported as increases of 0.7% and 0.3% respectively.

A big drop in new-car sales at the start of 1998 hurt January business. Dealers were discounting cars in December in the usual end-of-the-year promotions to try to claim the No. 1 sales spot.

Analysts said the report raises a caution flag about consumer spending, which fuels two-thirds of national economic activity, but said strong job growth and rising incomes will keep the economy expanding.

“While there is little doubt that the unsustainable breakneck pace of spending has begun to slow, the extent of the slowing is probably not that great,” said Philadelpia-based economist Joel Naroff of First Union Corp. in Charlotte, N.C.

Separately, the Labor Department provided fresh evidence of plentiful job opportunities, reporting that new claims for jobless benefits fell by 2,000 to 303,000 in the week ended Feb. 7 from the previous week.

Robust job markets are fostering rising incomes and sturdy levels of consumer confidence, though analysts said the money may be going into investments rather than for consumption.

“Consumers are apparently putting their money into the stock market or perhaps not spending it at all,” Philip Braverman, chief economist with DKB Securities in New York, told Reuters Financial Television.

Economist Gary Thayer of A.G. Edwards & Sons Inc. in St. Louis said the retail sales report suggested some caution set in during December and that it was carrying over into 1998.

“It would appear the consumer is in a buying mood but not aggressively,” Thayer said, adding that it was not worrying in view of high levels of consumer optimism that should provide support for at least moderate levels of spending in coming months.

Auto sales fell 1.1% to $52.2 billion--the biggest drop since a 1.2% decline in October--after rising 1.8% in December. But excluding autos, January retail sales were up 0.5% after a slim 0.1% December rise.

Department store sales jumped 1.6% to $28.2 billion after a 0.4% December decline. At clothing stores, sales increased 0.7% to $9.85 billion following a 0.1% December decline.

The rise in department store sales was the biggest since a 1.9% increase in December 1996.

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Retail Sales

In billions of dollars, seasonally adjusted:

Jan.: $214.8

Source: Commerce Department