Retail sales edge up 0.1% in February

Sales at the nation’s retailers barely budged in February as severe winter weather kept already cautious shoppers away from the malls.

The Commerce Department’s report, released Tuesday, raised fresh concerns that consumers could tighten their belts further, causing economic growth to slow even more than anticipated.

Retail sales edged up 0.1% in February. Sales were flat in January as shoppers took a breather after buying briskly during the holidays.

“Households hit the deep freeze when it came to spending,” said Joel Naroff, president of Naroff Economic Advisors in Holland, Pa.

Shoppers in February cut spending on a wide variety of goods, including home furnishings, building and garden supplies, clothing, electronics and appliances, and sporting goods, books and music. They also ate out less.

A bright spot was auto sales, which went up by 0.9% in February. That followed a decrease of the same size the previous month.

The latest retail sales figures were weaker than economists had forecast. They expected sales would go up 0.3% and that auto sales would be flat.

Excluding auto sales, which can swing widely from month to month, sales at all other merchants in February dipped 0.1%, the worst performance since October.

Consumer spending plays a major role in shaping overall economic activity, and therefore is closely watched by economists.

The economy has been going through a spell of sluggish growth, reflecting the strain from the housing slump and the ailing automotive industry. But consumers have been spending sufficiently to keep the economy expanding.

However, consumers could clamp down if the housing slump gets worse, and that could spell trouble for the economy.

Gasoline prices, meanwhile, are rising again. An unanticipated jolt in energy prices also could be jarring to consumers and the overall economy.

“We expect consumers will become increasingly cautious,” said Nigel Gault, economist at Global Insight.

On the retail front, sales in January and February suggest consumer spending this year got off to a bumpy start, analysts said.

The Federal Reserve, which had raised interest rates steadily for two years to thwart inflation, has left rates alone since August. Many economists predict the Fed will hold rates steady again when it meets next week. The Fed’s goal is to slow the economy enough to fend off inflation but not so much as to cripple economic activity.

If the weakness in retail sales persists, it would boost the chance that the Fed would consider cutting rates later this year, economists said.

The retail report showed that sales at home furnishings stores fell 1.7%, the most since August 2004. Sales at bars and restaurants fell 1.2%, the largest decline since September 2003.

Sales at building and garden supply shops declined by 1.4%. Clothing stores sales fell 1.8%.

In other economic news, the Commerce Department said business inventories of unsold goods rose 0.2% in January as sales slid. The increase came after a flat reading in December.