Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- U.S. retail sales climbed more than expected in January, posting a broad-based increase in a sign of promise for the economy at the start of the first quarter.
Retail sales last month increased 0.5%, the Commerce Department said Friday. Economists surveyed by Dow Jones Newswires had forecast a 0.3% increase.
The report was evidence consumers are loosening their purse strings amid high joblessness, tight credit conditions, and some less-than-rosy household balance sheets. Chain-store reports have also been positive.
"Despite the fact that consumers continue to face many headwinds, they are beginning to feel somewhat better about their financial situation," RBS economist Omair Sharif said.
Another report showed December business inventories fell, a sign that rising demand is depleting stockpiles.
The retail sales data were originally scheduled for Thursday release, but there was a rare delay because of a crippling storm that struck an already snowbound Washington.
Aside from the surprisingly strong 0.5% increase in January, the report showed December retail sales were adjusted upward, to a 0.1% decrease from a previously reported 0.3% decline.
Excluding the car sector, which was flat in January, all other retail sales rose 0.6%, in line with expectations. Ex-auto sales in December fell 0.2%.
The retail sales data are an important indicator of consumer spending. Consumer spending makes up 70% of gross domestic product, which is the broad measure of U.S. economic activity. The report generally was positive, indicating consumers are opening their wallets despite high joblessness.
The retail sales report showed U.S. filling station sales rose 0.4%.
Excluding sales of gasoline and cars, other retailers' sales climbed 0.6% last month, the fifth gain in six months.
Most merchants reflected in the data reported increases, with health and personal care stores up 0.1%; restaurants and bars up 0.6%; electronic and appliance stores up 1.2%; food and beverage stores up 0.8%; clothing stores up 0.3%; general merchandise stores up 1.5%; mail order and Internet retailers up 1.6%; and sporting goods, hobby, book and music stores up 1.0%.
Sales related to the housing sector, however, suffered big drops. Building material and garden supplies dealers fell 1.2% and furniture retailers tumbled 1.4%.
"After considerable hand-wringing about the underlying strength of retail sales in the past few months, this is a solid-looking report," said Brian Bethune, an economist at IHS Global Insight.
A separate government report Friday showed U.S. business inventories fell slightly in December 2009, suggesting companies relied on some stockpiles to meet growing demand in an expanding economy. Inventories fell 0.2%, while business sales rose 0.9% from November.
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