U.S. retail sales rebound in February
WASHINGTON — U.S. retail sales rebounded in February, driven by increases at auto dealerships and gasoline service stations, but consumer spending is slowing as households grapple with inflation and higher borrowing costs.
Retail sales rose 0.6 per cent last month, the Commerce Department’s Census Bureau said on Thursday. Data for January was revised lower to show sales tumbling 1.1 per cent instead of 0.8 per cent as previously reported.
Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, rising 0.8 per cent in February.
Sales were held down in January in part by frigid temperatures and difficulties adjusting the data for seasonal fluctuations. With those factors largely out of the way, sales are reverting to a more normal pattern.
Retail sales excluding automobiles, gasoline, building materials and food services were unchanged in February.
This so-called core retail sales measure corresponds most closely with the consumer spending component of gross domestic product. Core sales for January were revised to show them decreasing 0.3 per cent instead of 0.4 per cent as previously reported.
Consumer spending is cooling in the first quarter after helping to fuel economic growth in the Octoberdecember quarter. Spending, however, remains supported by a fairly tight labor market. Economists see no imminent recession.
The Atlanta Federal Reserve is forecasting GDP increasing at a 2.5 per cent annualized rate in the first quarter. The economy grew at a 3.2 per cent pace in the fourth quarter.
Consumer spending is holding up despite higher inflation, though households are increasingly focusing on essentials and cutting back on discretionary spending. The Federal Reserve has raised interest rates by 525 basis points to the current 5.25 per cent-5.50 per cent range since March 2022. The U.S. central bank is expected to start cutting rates by June.
A separate report from the Labor Department on Thursday showed initial claims for state unemployment benefits fell 1,000 to a seasonally adjusted 209,000 for the week ended March 9. Economists had forecast 218,000 claims in the latest week.