The Commerce Department reported today that retail sales increased by 0.5 percent last month, the best showing since November.
Excluding autos, sales posted a 0.6 percent reading, also better than expected, with strength coming from a surge at general merchandise stores, a category that includes big national chains such as those owned by Wal-Mart Stores Inc.
Strength in consumer spending is important because it accounts for 70 percent of economic activity. Economists are worried that the spending gains since last summer could falter given the tough times facing many U.S. households and that weakness could derail the fledgling recovery.
The overall economy grew at an annual rate of 5.7 percent in the October-December period, the best showing in six years, but the concern is that this growth could slow considerably in coming months as the impact of the government’s stimulus programs begins to fade and unemployment remains stubbornly high.
The 0.5 percent increase in retail sales in January followed a 0.1 percent decline in December, a figure that was revised up from an initial report that sales had fallen 0.3 percent during the month. The latest reading was the best showing since sales had surged by 2 percent in November.
Sales at auto dealerships were flat in January following a 0.1 percent rise in December. Activity last month was hurt by a series of safety recalls at Toyota.
The 0.6 percent increase in retail sales excluding autos followed a 0.2 percent drop in this category in December. The strength in January was led by a 1.5 percent jump in sales at general merchandise stores, the biggest one-month jump in this category since February 2009. General merchandise includes major department stores and big national chains such as Wal-Mart and Target.
Sales at specialty clothing stores rose by 0.3 percent while sales at gasoline stations were up 0.4 percent.
Other stores experiencing increases in January were sporting goods stores, restaurants and bars and nonstore retailers, the category that covers internet shopping.
Retailers seeing declines during the month included furniture stores, where sales fell by 1.4 percent, and hardware stores, with a drop of 1.2 percent.