A surprising 'ka-ching'

WASHINGTON - Retail sales posted a surprising increase in February as consumers did not let major snowstorms stop them from racking up purchases.

The gain, announced yesterday by the Commerce Department, was the biggest since November and provided hope that the recovery from the Great Recession is gaining momentum.

Some economists cautioned, though, that spending increases would remain modest as long as wages stayed flat and job creation was weak. An indication of that came in a separate report yesterday on consumer sentiment. The Reuters/University of Michigan consumer-sentiment index for March fell to 72.5 from 73.6 in late February.

It was the second straight monthly decline for the index. The index had been forecast to rise to 74, according to the median estimate in a Bloomberg News survey.

Economists also noted that the Commerce report revised down the increase in retail sales for January.

For February, sales rose 0.3 percent, the department said. That surpassed expectations that sales would decline 0.2 percent.

The overall gain was held back by a decline in auto sales, reflecting in part the recall problems at Toyota. Excluding autos, sales rose 0.8 percent. That was far better than the 0.1 percent increase economists had forecast.

But the February sales gain followed a scant rise in January and a slight decline for December. The increase for January was revised down from 0.5 percent to 0.1 percent.

"Weak jobs growth, low wages growth and tight credit mean that any further acceleration in consumption growth is unlikely," Paul Dales, an economist at Capital Economics, wrote in a research note.

Separately, outdoors-clothing retailer L.L. Bean said its sales fell by about $100 million in the fiscal year that ended last month from the year before to $1.4 billion. The Freeport, Maine, company said it would focus this year on building its online presence, boosting its business in China, and attracting younger customers.

The privately held company also said that, even with the revenue decline, employees would each receive a 3 percent pay bonus.

Even with the caveats, the February gain in sales nationally suggested that consumers were spending more freely than they were a few months ago. The increases were widespread.

Sales surged at restaurants, department stores, furniture stores, appliance shops, and hardware stores, according to the government report.

Consumer spending is watched carefully because it accounts for 70 percent of total economic activity.

Percentage changes

in sales from January.

Category % change

Electronics/

appliances +3.7

Groceries +1.3

Department stores +1.1

Restaurants/bars +0.9

Furniture +0.7

Clothing +0.6

All retail sales +0.3

Health/

personal care -0.7

Autos -2.0

SOURCE: Commerce Department

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