Retail Sales Increase 0.5% in February

U.S. retail sales rose in February, boosting expectations for first-quarter growth, and foreigners in January still believed that the United States was a good place to invest, two reports on Tuesday showed.

Healthy consumer spending drove retail sales up 0.5% last month, the Commerce Department said. Although that was slightly below forecasts for a 0.6% gain, analysts said a revision in January to a 0.3% rise from a 0.3% drop made up for the disappointment.

“You have to weigh in the big January revisions. We are doing pretty darn good. It’s pretty well spread. Consumers are spending their little hearts out,” said David Wyss, chief economist at Standard & Poor’s Ratings Services in New York.

February’s strength in retail sales was broad-based, with brisker activity at furniture, electronics, food, clothing and general merchandise stores. Only one major category -- building materials and garden stores -- showed a decline.

A separate report by the Treasury Department showed that net capital inflows surged to a larger-than-expected $91.5 billion in January, the second-biggest inflow on record and more than enough to finance the nation’s current account deficit.

Currency analysts had estimated a net inflow into U.S. assets at $55 billion to $75 billion for January, and the dollar gained broadly on the upside surprise.

“Clearly, the U.S. is still seen as an attractive place to invest, despite the concerns over the dollar,” said Sherry Cooper, chief economist at BMO Nesbitt Burns.

Financial market participants watch the report as a measure of foreigners’ appetite for U.S. assets. The United States depends on foreign investors buying assets like Treasury bonds to finance America’s current account deficit.

The U.S. trade gap in goods and services, which is a persistent weight on the dollar, was $58.3 billion in January.

The Commerce Department also said Tuesday that business inventories climbed 0.9% in January for their fourth straight monthly gain. That was in line with analyst expectations.

January stockpiles remained lean by historical standards. The inventory-to-sales ratio, which measures the number of months it would take to deplete stocks at the current sales pace, was unchanged from December at a record-low 1.3 months.