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Retail sales up in February
Results slightly below Wall Street's expectations, but January revised to gain instead of decline.
March 15, 2005: 9:31 AM EST

NEW YORK (CNN/Money) - Retail sales rose moderately in February, a government report showed Tuesday, but the slightly lower-than-expected result was somewhat overshadowed by a revised gain for January.

The Department of Commerce report said overall sales rose 0.5 percent last month, compared with a revised 0.3 percent gain in January. The initial January report showed a decline of 0.3 percent.

Economists surveyed by Briefing.com had forecast retail sales to increase 0.6 percent for the month.

Excluding auto sales, retail sales rose 0.4 percent, following a hefty 1 percent revision the prior month. Economists, on average, had expected a rise of 0.8 percent for the period.

The February increase was driven by strong sales of electronics, clothing and food. Electronics sales rose 1.6 percent, apparel posted a 1.1 percent gain and food sales jumped 1.2 percent.

"The clear suggestion here is that people waited until after the holidays for bargains, though this is likely not the whole story," Ian Shepherdson, chief U.S. economist with High Frequency Economics, wrote in a report. "Cashflows were crimped by surging gas prices before the holidays. Overall, sales are trending steadily upwards."

Also boosting spending last month was the rise in the value of gasoline purchases, up 0.9 percent in February.

Among the weaker-performing categories were sales of building materials and garden supplies, which suffered a 1.3 percent decline last month and an anemic 0.1 percent growth in sales of sporting goods and 0.3 percent rise in sales of health and personal care products.

"We're getting some very good spending going into the first quarter," said Robert Brusca, chief economist with FAO Economics. "It's interesting that while there is spending optimism, consumers are still clearly divided into two main categories -- those with lots of money and those that are hurting. That's why these monthly results have shown so much irregularity."

Added Brusca, "I don't think inflation is that much of a concern. However, there are still a few short-term issues at hand that could challenge spending, such as the labor market. Though it had improved, it hasn't yet turned a sharp corner."  Top of page

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