Data Suggests Recovery Under Way

Economic Report From Reuters

Sales at U.S. retailers rose more than expected in January, suggesting consumers were feeling a bit more comfortable to spend and sustain the economic recovery. The Commerce Department said Friday total retail sales increased 0.5 percent. In addition, December and November were both revised to show stronger spending. December sales were revised to down only 0.1 percent, compared with the previously reported fall of 0.3 percent, while November sales were revised to up 2 percent from up 1.8 percent.

Retail sales are being closely watched for signs whether consumers are healthy enough to sustain the economy's recovery once government stimulus and the boost from restocking by businesses wanes.

The economy grew at a 5.7 percent annual rate in the fourth quarter, the fastest clip in six years. The economy has grown for two straight quarters following the worst downturn since the Great Depression of the 1930s.

High unemployment in the United States has sapped consumers' appetite for shopping, but improving labor market conditions may support future sales and help to nurse the broader economic recovery.

Excluding motor vehicles and parts, retail sales rose 0.6 percent in January after slipping 0.2 percent the prior month. Economists had expected a 0.5 percent gain. Sales were boosted by electronics and appliance stores, where sales rose 1.2 percent after declining 3.5 percent in December. Sporting goods, hobby and book sales rose 1 percent last month, adding to December's 1.9 percent increase.

Sales at general merchandise stores rose 1.5 percent in January, the biggest gain since February 2009.

Core retail sales, which exclude autos, gasoline and building materials, rose 0.8 percent after falling 0.3 percent in December. Core sales correspond most closely with the consumer spending component of the government's GDP accounts.

Unemployment continues to be a concern, but spending patterns suggest positive sentiment and confidence in a sustainable recovery. Let us know what you're seeing in your store!

Source: Reuters and cnbc.com