Americans heartened by an improving labor market boosted spending at stores and malls by the most in five months, adding to signs that the world’s largest economy is gaining strength.
The 1.1 percent advance followed a 0.6 percent increase in January that was larger than previously estimated, according to Commerce Department data issued today in Washington. Sales rose in 11 of 13 categories, including auto dealers and clothing stores, showing gains in demand were broad based.
Stocks and bond yields rose as the report indicated that the best six-month streak of employment growth since 2006 is bolstering spending even as gasoline costs rise. Job gains may not be enough to satisfy Federal Reserve officials, who today may reaffirm a commitment to keep interest rates low.
Consumers are “unfazed by higher gas prices,” said Jonathan Basile, an economist at Credit Suisse in New York, who correctly forecast the increase in spending. “This is a pleasant surprise on the overall picture for the economy. For the Fed, it’s steady as she goes. They will be encouraged, but there is still a long way to go.”
The Standard & Poor’s 500 Index (SXP) climbed 0.7 percent to 1,380.6 at 11:22 a.m. in New York. The yield on the 10-year Treasury note increased to 2.08 percent from 2.03 percent late yesterday.
The gain in sales last month matched the median forecast in a Bloomberg News survey of economists. Estimates ranged from gains of 0.5 percent to 2.1 percent. The Commerce Department revised the January increase from a previously reported 0.4 percent advance.
Sales at chains like Gap Inc. (GPS) and Target Corp. (TGT) last month beat analysts’ estimates. Williams-Sonoma Inc., the biggest U.S. gourmet-cookware chain, said demand improved at the start of the year following the holiday shopping season.
“Post holiday, we saw a progressively stronger retail environment,” Laura Alber, chief executive officer of the San Francisco-based company, said on a March 8 conference call. The company reported record earnings for 2011.
Sales increased 1.6 percent at automobile dealers, reversing the prior month’s drop, today’s report showed. The results fell short of industry figures that showed an even bigger gain.
Cars last month sold at the fastest pace in four years, led by Chrysler Group LLC and a surprise gain from General Motors Co. (GM) Light-vehicle sales accelerated 6.4 percent from January to a 15 (SAARTOTL) million annual rate, the strongest since February 2008, according to Ward’s Automotive Group.
“There are a number of factors that are helping release this pent-up demand,” Don Johnson, vice president of GM’s U.S. sales, said on a March 1 conference call with analysts. “They include stronger employment, good credit availability, and both of those are leading to improving consumer sentiment.”
Automobile stockpiles jumped by the most in more than a year in January, leading a 0.7 percent increase in business inventories, the Commerce Department said in a separate report today.
Retail sales excluding autos increased 0.9 percent in February, exceeding the median forecast of economists surveyed that called for a 0.7 percent gain.
The sales data, which aren’t adjusted for inflation, reflected a 3.3 percent jump in receipts at service stations, the biggest gain in almost a year, as gasoline costs climbed. Regular (3AGSREG) fuel in February averaged $3.56 a gallon, or 18 cents more than January, according to AAA, the nation’s biggest auto organization. It advanced further this month, reaching $3.81 on March 12, the highest since May.
Purchases at clothing stores rose 1.8 percent, the most since November 2010. Furniture and general merchandise stores were the only categories to show a decrease in demand.
Employment and income gains are giving consumers the confidence to spend more. The Bloomberg Consumer Comfort Index rose to an almost four-year high in the week ended March 4.
Employers boosted payrolls more than forecast in February. The 227,000 increase followed a revised 284,000 gain in January that was bigger than first estimated, the Labor Department reported on March 9. The jobless rate held at a three-year low of 8.3 percent.
Job openings were little changed in January, capping the best back-to-back months since mid 2008, a signal businesses remain confident about the economic expansion, other figures from the Labor Department showed today. The number of positions waiting to be filled totaled 3.46 million, down from a revised 3.54 million in December that was higher than previously estimated.
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