Retail sales expected to slip in February, reflecting winter storms

Friday, March 12, 2010

Ahead of the Bell: Retail Sales

WASHINGTON — Retail sales probably slipped slightly in February reflecting weakness in demand for autos and the severe winter storms that hit much of the country.

Economists surveyed by Thomson Reuters were forecasting that sales dipped 0.2 percent in February following a gain of 0.5 percent in January. The Commerce Department will release the new report at 8:30 a.m. EST Friday.

The analysts believe that sales excluding autos probably edged up a slight 0.1 percent in February following a much stronger 0.6 percent jump in February.

Economists at IHS Global Insight said they believed that February sales were held back by weakness in demand for autos, the winter snowstorms and lower gasoline prices. However, these economists cautioned that there could be a surprise on the upside because the monthly survey of the nation’s chain stores showed unexpected strength last month.

The International Council of Shopping Centers reported that sales jumped 3.7 percent in February compared to a year ago, the biggest gain since November 2007, the month before the recession began.

The February report on national chain stores marked the third consecutive increase. Shoppers shrugged off the snowstorms and lingering worries about the economy to visit a broad array of merchants from luxury retailer Nordstrom to middlebrow Macy’s Inc. to discounter Target Corp. All three chains reported solid sales increases that beat analysts expectations.

Consumer spending is being watched carefully because it accounts for 70 percent of total economic activity. Economists are worried that the economic recovery they believe began last summer could falter if consumer confidence falters in the face of continued high unemployment. The jobless rate in February remained stuck at 9.7 percent with employers cutting another 36,000 jobs.

Since the recession began two years ago, the nation has lost 8.4 million jobs and many economists believe that it could take at least four years to recover those jobs lost in the worst recession since the 1930s.

They say it could take even longer for the jobless rate to drop back down to its more normal range of 5.5 percent to 6 percent.

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