Retail sales in the U.S. rose in January for a third consecutive month, showing household spending is holding up even as an increase in the payroll tax takes a bigger bite from paychecks.
Purchases climbed 0.1 percent, matching the median forecast of economists surveyed by Bloomberg, according to Commerce Department figures issued today in Washington. The gain was smaller than the 0.5 percent increases in December and November.
Department stores and online merchants were among those showing growing demand as improving job prospects and a strengthening housing market helped companies such as Gap Inc. (GPS:US) and Target Corp. (TGT:US) Some economists boosted estimates for the start of the year as the figures eased concern consumer purchases would retrench after a fourth-quarter pickup.
“The first quarter is looking better than we were expecting,” said Conrad DeQuadros, a senior economist at RDQ Economics in New York. “Payrolls are still growing and wage growth, while moderate, is still rising. We’re seeing increases in home prices and equity prices. Those are all positives for the household sector.”
Most stocks rose, sending the Standard & Poor’s 500 Index to the highest level since October 2007. The S&P 500 climbed 0.1 percent to 1,520.33 at the close in New York. The S&P Supercomposite Retailing Index, which includes Gap, Target and Macy’s Inc., gained 0.5 percent.
The median forecast for January retail sales in the Bloomberg survey was based on estimates from 80 economists. Projections ranged from a drop of 0.7 percent to an increase of 0.6 percent.
Six of 13 major categories showed gains last month, led by a 1.1 percent jump at general merchandise stores that was the biggest since April 2011. Demand at sporting goods merchants and non-store retailers, which include Internet outlets such as Amazon.com Inc. (AMZN:US), also advanced.
Purchases excluding autos, gasoline and building materials, which are the figures used to calculate gross domestic product, climbed 0.1 percent after revised increases of 0.7 percent in each of the previous two months that were larger than previously estimated.
Household purchases rose at a 2.2 percent annual rate from October through December after increasing at a 1.6 percent pace in the previous three months, according to figures from the Commerce Department.
Economists at Macroeconomic Advisers LLC in St. Louis boosted their tracking estimate of first-quarter household spending to 1.9 percent from a prior forecast of 1.4 percent after today’s report.
The figures showed demand at auto dealers fell 0.1 percent in January from the prior month, in line with industry data issued earlier this month. Cars and light trucks sold at a 15.2 million annual rate in January after 15.3 million in December, according to data from Ward’s Automotive Group. Including November’s 15.5 million rate, auto sales over the past three months have been the strongest in five years.
Demand for automobiles as consumers replace older cars and trucks is benefiting automakers such as Ford Motor Co. (F:US) and General Motors Co. (GM:US) Ford’s deliveries surged 22 percent last month compared with January 2012 and General Motors sales climbed 16 percent, the companies reported Feb. 1.
Same-store sales for the more than 20 companies tracked by researcher Retail Metrics Inc. surged 4.5 percent in January from the same month in 2012, the biggest year-to-year gain since September 2011.
San Francisco-based Gap, the largest U.S. apparel chain, posted an 8 percent gain in sales, double the average estimate of 4 percent in a survey by Retail Metrics. Minneapolis-based Target, the second-largest U.S. discounter, posted a gain of 3.1 percent, above projections of 1.7 percent.
The fiscal pact passed by Congress on Jan. 1 avoided sweeping tax increases and made permanent George W. Bush’s income-tax cuts for 99 percent of Americans. At the same time, the agreement let the payroll tax used to pay for Social Security benefits return to the 2010 level of 6.2 percent from 4.2 percent. A worker earning $50,000 a year is taking home about $83 less a month because of the higher levy.
The effects of the tax increase may have been most visible in areas that could easily be cut back. Receipts at restaurants and bars were little changed last month, the weakest showing in seven months, today’s Commerce Department report showed.
Progress in hiring may ease the pressure on household budgets. Employers added 157,000 workers to payrolls in January after a revised 196,000 rise the prior month and a 247,000 surge in November, Labor Department data showed Feb. 1. Revisions added a total of 127,000 jobs in the last two months of 2012.
Confidence among American consumers rose in the week ended Feb. 3 for the first time this year. The Bloomberg Consumer Comfort Index climbed to minus 36.3 from minus 37.5 the prior period, which was the weakest since early October.
A strengthening stock market also may boost consumer sentiment and spending. The Standard & Poor’s 500 index climbed 5 percent in January, its biggest gain for the month since 1997. The S&P 500 has rallied for six straight weeks, closing on Feb. 8 at the highest level since November 2007.
Other reports today showed the cost of imported goods climbed in January for the first time in three months and inventories at U.S. companies climbed at a slower pace in December.
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