WASHINGTON – Retail sales rose solidly in February as Americans bought automobiles and other goods even as they paid more for gasoline, suggesting consumer spending this quarter will hold up despite higher taxes.
The Commerce Department said on Wednesday retail sales increased 1.1 percent, the largest rise since September, after a revised 0.2 percent gain in January.
Economists polled by Reuters had expected retail sales to rise 0.5 percent last month after a previously reported 0.1 percent gain in January.
So-called core sales, which strip out automobiles, gasoline and building materials and correspond most closely with the consumer spending component of gross domestic product, rose 0.4 percent after advancing 0.3 percent in January.
U.S. stock index futures erased earlier losses, while prices for Treasury debt fell. The dollar rose against the yen and extended gains versus the euro.
The retail sales data was the latest to suggest momentum in the economy as fiscal policy tightened, marked by the end of a 2 percent payroll tax cut and an increase in tax rates for wealthy Americans on January 1.
Job gains accelerated in February and manufacturing put in its best performance in 1-1/2 years.
"The data add to the view that the U.S. economy continues to show reassuring resilience in the face of fiscal headwinds, and that consumers will help drive a further upturn in the economy in the first quarter," said Chris Williamson, chief economist at Markit.
The gains in core sales in the first two months of the year offered hope that consumer spending would probably not slow much this quarter after growing at a 2.1 percent annual rate in the fourth quarter. Consumer spending accounts for about 70 percent of the U.S. economy.
That should help boost economic growth after output barely expanded in the last three months of 2012.
Barclays raised its first-quarter growth estimate by three tenths of a percentage point to 2.2 percent after the upbeat retail sales report.
Despite paying 35 cents more for gasoline at the pump, consumers also bought automobiles last month.
Receipts at auto dealerships rose 1.1 percent after falling 0.3 percent in January. Excluding autos, retail sales increased 1.0 percent, also the largest increase in five months. That followed a 0.4 percent advance in January.
Last month, the high gas prices helped to lift sales at gasoline stations by 5.0 percent, the largest increase since August. They had risen 0.7 percent in January. Excluding gasoline, sales rose 0.6 percent.
Sales at building materials and garden equipment suppliers increased 1.1 percent, reflecting gains in homebuilding as the housing market recovery gains momentum. Receipts at clothing stores gained 0.2 percent.
Delays in tax refunds probably hurt sales at restaurants and bars, which fell 0.7 percent, while receipts at sporting goods, hobby, book and music stores declined 0.9 percent.
Sales of electronics and appliances slipped 0.2 percent, while receipts at furniture stores dropped 1.6 percent, the largest decline since April 2011.
(Editing by Andrea Ricci)