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Signs of life at the store

Latest government report shows retail sales fell much less than expected in February, and surprisingly strong January sales were revised even higher.

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By Parija B. Kavilanz, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) -- U.S. store sales showed a smaller-than-expected decline in February after an unexpected surge in January that was bigger than originally reported, according to a government report Thursday.

The Commerce Department said total retail sales fell 0.1% last month, compared with January's revised increase of 1.8%. January's increase was originally reported at 1%.

Economists surveyed by Briefing.com had been expecting a decrease of 0.5% for February.

This second month of better-than-expected sales results prompted one retail expert to say he was "hopeful" that the six-month stretch of monthly sales declines was "moderating" and could reverse before the end of the year.

"We have changed our thinking based on these numbers," said Scott Hoyt, senior director of consumer economics with Moody's Economy.com.

Hoyt said the surprisingly strong sales numbers both in January and in February's core sales, which exclude auto purchases, was due to lower-income consumers having more money in their pockets as a result of government actions.

"There was a significant increase in payments to Social Security, and welfare and food stamp payments in January," said Hoyt, adding that this factor combined with a reduction in tax payments was boosting household budgets.

"There will be another bump to household cash from the government over the course of spring and into summer. That could spur spending again," he said.

But another analyst was less optimistic.

"It [retail sales increase] is highly unlikely to last given the latest downdraft in consumers' confidence and the continued pressure on incomes as payrolls collapse," Ian Shepherson, chief U.S. Economist with High Frequency Economics, wrote in a report Thursday.

"It looks to us like little more than a temporary, though welcome, rebound," he said.

The overall monthly sales number was dragged down by a 4.9% drop in auto sales and a 4.3% decline in sales of auto parts.

Sales excluding autos and auto parts increased 0.7%, compared to a revised 1.6% rise in January. The measure had originally shown a 0.9% increase for January.

Economists had forecast a decrease of 0.1% for February sales, excluding auto purchases, according to Briefing.com.

The government report showed sales rose across retail categories, including a 2.8% gain clothing purchases, a 0.7% increases in furniture sales and a 1.1% increase in purchases at department stores.

Gasoline station sales jumped 3.4%, boosted by rising gas prices at the pump. To top of page

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