Retail Sales Climb 1.4% in February, Triple the Gain Posted in January

Rebounding clothing and furniture sales in February helped push retail sales for the month up 1.4%--the best monthly gain since November, according to government figures released Wednesday.

The Commerce Department said February sales hit a seasonally adjusted record $112.1 billion, even though auto sales rose only 0.4% for the month. Retail sales, excluding autos, were up 1.7% to $88.31 billion in February from January.

The 1.4% increase was the biggest advance since a 1.5% gain last November and was nearly triple the revised 0.5% gain for January.

The Reagan Administration interpreted the surprisingly strong February increase as a sign that consumer demand would help keep the economy buoyant in coming months. The gain was more than twice what many private analysts had been forecasting, but they attributed it to a rebound from weak, weather-depressed January sales.

Continued Growth Seen

White House spokesman Larry Speakes described the February increase as an “outstanding” sign of growing consumer confidence. “People are emerging from the winter season with economic strength that is showing at the cash register,” he said.

Commerce Secretary Malcolm Baldrige said the monthly increase should help retailers reduce swollen inventories and pave the way for further gains in domestic production and employment. “With consumer confidence high and employment and incomes rising, retail spending should continue to grow,” he said.

Sandra Shaber, an economist with Chase Econometrics in Bala Cynwyd, Pa., explained that the earlier, less buoyant forecasts might have been based on lackluster year-to-year sales comparisons by major retail chains over the last two months.

“A lot of people were surprised because the chain store sales were not very strong,” Shaber said. “I think we’re back on a moderate growth track.”

But Edward Yardeni, chief economist for Prudential-Bache Securities, pointed out that “many of the components rebounded from the weather-depressed January activity. The big question is whether the demand side of the economy can continue to grow vigorously while the supply side is being hurt severely by import competition.”

The 1.4% gain in February retail sales was broad based compared to January, when auto sales, which rose 4.1%, accounted for most of the month’s 0.5% increase. A sharp recovery in department and furniture store sales occurred in February after a sharp drop in January.

The Commerce Department reported that:

- Sales of durable goods such as autos and furniture rose 0.9% in February to an adjusted $39.96 billion after rising 1.4% in January to an adjusted $39.32 billion.

- Sales of non-durable goods in February rose 1.7% to an adjusted $72.16 billion after holding unchanged in January at an adjusted $79.97 billion.

- Department store sales rose 3.7% in February after having fallen 5% in January.

- Sales at clothing stores, which had suffered a 6.7% sales drop in January--the worst on record--rebounded with a 2.9% increase in February.

- Sales at restaurants and bars rose 2.9%, while grocery store sales rose a slight 0.1%.

- Furniture store sales rose 2.3% following a 3.4% January decline.

- Sales of hardware and building materials dropped 1.5% after a 2.6% drop in January.

In year-to-year comparisons, total February retail sales were up 6.3% from the same month last year. Durable-goods sales were up 8.3% from a year ago, while sales of non-durables were up 5.2% from last year.