Originally created 03/13/98

Retail sales up 0.5 percent in February



WASHINGTON -- Retail sales rose 0.5 percent in February, as unseasonably warm weather brought shoppers out early to buy spring clothes and garden supplies.

The increase, to a seasonally adjusted $218.1 billion, followed an even bigger increase of 1.0 percent in January, the Commerce Department said today. The January figure, the biggest gain in six months, had originally been estimated as a tiny 0.1 percent increase.

Taken together, both months show that consumer spending, which accounts for two-thirds of economic output, began the year at a healthy pace after a disappointing holiday shopping season.

Most economists believe economic growth will be significantly slower this year than last because of adverse effects from the Asian economic crisis. But so far the weakness is yet to be felt as unemployment dipped in February to 4.6 percent, returning to a 24-year low.

In a separate report today, the Labor Department said that new claims for unemployment benefits fell by 7,000 last week to 298,000, a sign of continued strength in the labor market.

The February sales report showed that consumer demand outside of the auto sector rose 0.6 percent. That followed a revised 1.3 percent surge in January, the biggest gain in almost two years.

The warm weather in most parts of the country, caused by El Nino, spurred strong demand for spring clothing, garden supplies and other hardware products.

Sales at department stores and specialty stores rose a strong 1.3 percent, after even bigger gains of 2.1 percent in January.

Sales at hardware and garden supply stores were up 2.0 percent in February after a 3.6 percent jump in January. Demand in this area has been helped not only by the weather but by a sharp drop in mortgage rates that has sparked a boom in home sales.

While furniture sales dipped 0.4 percent in February, that marked only a slight setback from a huge 3.3 percent gain in January.

Auto sales were up a slight 0.1 percent in February after a small drop of 0.2 percent in January.

Sales at gasoline service stations were down 1.1 percent, the biggest decline for any major category last month, reflecting a drop in prices due to abundant world supply.

Sales at grocery stores, drug stores, restaurants and bars were all up in February.