January Retail Sales Up 0.2%; Unemployment Claims Slide

Post-holiday discounts drew Americans to department stores and clothing shops in January, helping to produce a modest 0.2% gain in retail sales after a big increase the month before.

The increase reported Thursday by the Commerce Department, to a seasonally adjusted $232 billion, was in line with economists’ expectations. It followed a large 1% gain in December and dovetailed with their belief that robust economic growth at the end of 1998 is carrying over into 1999.

Conditions remain bright for continued strong sales. Unemployment held at a 29-year low of 4.3% in January. Interest rates remain low, stock prices high and inflation contained.

In a sign the supply of jobs remains plentiful, the Labor Department said the number of Americans filing first-time claims for unemployment benefits dropped by 13,000 last week to a seasonally adjusted 281,000, the lowest level since July 1997.

A four-week moving average of claims, which smooths fluctuations in the volatile data, fell by 19,750 to a four-month low of 297,750.

While the overall increase in sales was relatively muted, sales at department stores and other general merchandisers soared 1.5%, the biggest increase in 11 months.

Clothing, shoe and accessory shops reported a 1% increase in January, and drugstores a 0.8% advance.

Meanwhile, auto sales rose 0.2% on top of a 2.2% jump in December. Receipts at building-supply and garden centers were unchanged after a healthy 1.9% gain in December.

Furniture sales fell 0.4%, their worst performance in nine months. They were strong through much of 1998, helped by spillover from record home sales.

Sales also fell at food stores, 0.5%; gas stations, 0.5%, reflecting the lowest gasoline prices in more than a decade; and restaurants and bars, 0.2%.