Consumers haven't given up just yetBut the latest retail sales numbers for January show Americans are cutting back on pricey discretionary purchases, like electronics and furniture.NEW YORK (CNNMoney.com) -- Although retail sales showed a surprising rebound in January after a dismal slump in December, some economists say there are plenty of signs that consumer spending is slowing even if it hasn't completely hit the skids. "We have to be very careful in interpreting the January sales report. I think the report is far weaker than the headline figures suggest," said Scott Hoyt, director of consumer economics with Moody's Economy.com. The Commerce Department reported Wednesday that total retail sales rose 0.3%, compared to a 0.4% decline in December. Economists surveyed by Briefing.com expected a 0.3% drop in retail sales for the month. Stripping out volatile auto sales, sales rose a slightly better-than-expected 0.3% compared to a 0.4% decline in December. Economists had anticipated a 0.2% in the measure. However, overall January sales were aided by a 0.6% increase in auto purchases, while a strong 2% surge in gasoline station sales - which have benefited from record-high gas prices - pushed up the core retail increase. Excluding both the auto and gas station sales, January retail sales were actually flat for the month and up just 2.6% year-over-year. That's would be the weakest monthly sales gain since April 2003, Hoyt said. "Gasoline station strength is actually a problem for consumers. Gas prices are so high that consumers are forced to spend more," Hoyt said. Regarding the uptick in auto sales, Hoyt and other economists said they were "perplexed" by the increase, given that automakers actually reported a steep 25% decline in raw sales in January compared to December. "The [auto] data don't always move together but this is a huge gap," Ian Shepherdson, Chief U.S. economist with High Frequency Economics, wrote in a note Wednesday. Hoyt said he wouldn't be surprised to see the January auto sales numbers revised lower next month. Last month's government report comes on the heels of extremely weak January same-store sales numbers, which raised fears that Americans were cutting spending in the face of the housing downturn, higher gas prices and tighter credit conditions. If consumers retrench, it's likely to have broad-based repercussions on the overall economy, since consumer spending fuels two-thirds of economic activity. But for now, heavy discounts, an emphasis on personal health and the need to keep buying everyday staples is spurring spending in select categories such as clothing, groceries and health products. To that end, consumers splurged on discounted clothing last month, resulting in a 1.4% jump in apparel store sales. Elsewhere, health store sales rose 0.8%, and food and beverage stores logged a 0.6% sales gain last month. However, sales declines for other sellers of discretionary goods showed a steeper pullback in most other retail categories. Electronics sellers suffered a 1% sales decline, sales at home furnishing stores slipped 0.5%, sporting goods sellers logged a 1.3% sales drop, and sales at department stores fell 1.1%. |
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