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Retail sales show softness
Sales rose, but excluding autos the numbers missed forecasts; are consumers set to pull back?
March 11, 2004: 11:14 AM EST
By Mark Gongloff, CNN/Money staff writer

NEW YORK (CNN/Money) - Strong automobile sales pushed total retail sales higher in February, the government said Thursday, but sales aside from autos came in much weaker than Wall Street forecasts.

Though many economists doubted consumer spending was about to fall off the table, the disappointing number excluding auto sales followed several recent signs of sagging consumer confidence, raising some questions about the strength of the broader economy.

The Commerce Department said retail sales rose 0.6 percent to $327.2 billion last month after rising a revised 0.2 percent in January.

But excluding autos -- which account for about a quarter of total sales and can fluctuate widely from month to month -- sales were unchanged at $249.8 billion after rising a revised 1.2 percent in January.

Economists, on average, had expected total sales to rise 0.6 percent and sales excluding autos to rise 0.5 percent, according to Briefing.com.

"The ex-vehicles number may have disappointed some, but given how strong the gain was in January, investors should not be disappointed," said Joel Naroff, president of Naroff Economic Advisers. "Consumers are still consuming."

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Still, the report followed close on the heels of sagging consumer sentiment numbers from the Conference Board, the University of Michigan, ABC/Money magazine and Investor's Business Daily.

Though sentiment measures aren't always predictive of spending habits, the declines raise a red flag about the health of consumer spending, which makes up more than two-thirds of the economy.

"It would have been a lot more comforting to see greater strength in the ex-auto component than in the headline figure," said Anthony Chan, chief economist at Banc One Investment Advisors.

Separately, the Labor Department said new claims for unemployment benefits edged lower last week, and that the number of people drawing benefits for more than a week fell to its lowest level since July 2001.

Softness in the labor market has been the prime culprit for declining consumer confidence, and it's also affected wage growth. Average hourly wages grew at the slowest pace on record during the 12 months ending in February, according to the department.

Though consumer spending is likely to get a boost in the first half of the year from bigger-than-usual income-tax refund checks and a new wave of mortgage refinancing, many economists believe stronger job and wage growth will be necessary to support consumer spending over the long haul.

"I've thought there would be some moderation in consumer spending this year, but I also thought that job growth would be better at this point than it has been," said Paul Kasriel, director of economic research at Northern Trust. "It may be that consumer spending will moderate even more than what I'm forecasting."

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On Wall Street, stock prices fell after the reports, while Treasury bond prices rose.

Sales of autos and auto parts jumped 2.7 percent last month after falling a revised 3 percent in January. Sales at gas stations dipped 0.1 percent after rising a revised 2.8 percent in January.

Sales at general merchandise stores rose 1.3 percent, compared with a revised 1.2 percent gain, while clothing sales rose 0.4 percent after a revised 2.1 percent increase.

Electronics sales edged higher but furniture sales fell, as did food and beverage sales.

Health and personal care sales fell 1.2 percent after a small gain in January.

Bad weather was blamed for weakness in some components of sales and credited with strength in others.

Flat sales of building materials and garden equipment, and a 1.2-percent decline in sporting-goods sales, could have been weather-related.

But the strength in clothing sales may have been driven by the bad weather, bringing in "customers to help clear out stock of winter clothing," Gina Martin, economist at Wachovia Securities, said in a note to clients.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.