Retail Sales Rise Shows U.S. Recovers From Winter Chill: Economy

March 13 (Bloomberg) -- Sales at U.S. retailers rose in February for the first time in three months, claims for jobless benefits dropped last week and consumer confidence improved, pointing to an economy regaining traction after a harsh winter slowed demand even more than previously estimated.

The 0.3 percent advance in purchases followed a 0.6 percent drop in January that was larger than initially reported, the Commerce Department in Washington said. Unemployment claims unexpectedly fell to a more than three-month low and consumer sentiment rose to the second-highest level since August.

The confidence report showed those at the lowest end of the pay scale were becoming less pessimistic, a sign the improving job market will help broaden gains in spending. The extent of the economic damage inflicted by the weather remains open to debate, which means Federal Reserve policy makers will probably continue to trim monthly bond purchases at a measured pace when they meet next week.

“We’ll see a little bit more traction on the consumer side as the weather improves and people get a little bit more willing to leave the house,” said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit and the best forecaster of retail sales over the past two years, according to data compiled by Bloomberg. Still, the gain in February “has to be considered against the negative revisions to January and December.”

Stocks fell, erasing early gains after the Standard & Poor’s 500 Index came within four points of a record. The S&P 500 declined 0.6 percent to 1,857.5 at 12:25 p.m. in New York.

Economists’ Forecasts

The median forecast of 84 economists surveyed by Bloomberg called for a 0.2 percent advance in retail purchases. Estimates ranged from a 0.2 percent drop to a 0.6 percent gain. The decline in January, revised from an initially reported 0.4 percent decrease, was the biggest since March. December receipts were also weaker -- down 0.3 percent compared with a previously estimated 0.1 percent drop.

Another report from the Labor Department showed first-time claims for unemployment benefits dropped by 9,000 to 315,000 in the week ended March 8. Employers cutting back on dismissals may be encouraged to take on more workers as demand rebounds. Payrolls increased by 175,000 in February after a 129,000 gain that was more than initially estimated, the agency said March 7.

“The labor market continues to improve,” said Brian Jones, senior U.S. economist atSociete Generale in New York who accurately forecast the number of claims. “The economy is not in a soft patch.”

Consumer Comfort

Improving conditions in the job market help explain why households are more upbeat. The Bloomberg Consumer Comfort Index climbed to minus 27.6 in the period that ended March 9 from minus 28.5 the prior week.

The advance was the fifth straight and the reading was second only to the minus 27.4 in the week ended Dec. 22 as the strongest since mid-August. Americans were more optimistic about the economy than at any time in the last seven months.

The Bloomberg gauge of whether it’s a good time to buy also increased. The report showed sentiment improved for those making less than $15,000 a year, reaching the highest level since August.

“Better employment prospects and a reduced pace of firings in the economy has bolstered confidence in the broader economy,” said Joseph Brusuelas, a senior economist atBloomberg LP in New York. “Improved sentiment among lower- income groups is particularly important and will likely support growth later this year.”

The labor market is also showing signs of picking up in Australia. The number of people employed full-time rose by 80,500 in February, the biggest increase since August 1991, after the country’s last recession.

Broad-based Gain

News Source: www.sfgate.com