Retail spending picks up in January

By Vicki Needham - 02/14/12 10:43 AM ET

Consumers picked up their spending in January as retail sales rose, another signal that the economy is improving.

Sales were $401.4 billion, up a seasonally adjusted 0.4 percent last month from a downwardly revised figure in December that showed flat sales, the Commerce Department said Tuesday.

Core retail sales, excluding autos and gas, were up 0.7 percent, a level that suggests consumers are engaging and increasing spending as the job market improves.

The report includes retailers such as auto dealerships, department stores, restaurants and bars, grocery stores and gasoline stations.

Retail sales levels provide some insight into consumer spending, which is 70 percent of economic activity and is needed for a more robust recovery.

Total sales for the November through January period were up 6.3 percent from the same period a year ago.

Food sales at restaurants and bars were up 0.6 percent in January and 8.2 percent above a year ago, while sales of building materials and garden equipment were up 0.2 percent in January, 8.1 percent ahead of the same period last year.

Spending on electronics increased 0.5 percent last month, while sales of sporting goods and books increased 1.1 percent, and department and general merchandise stores saw increases of 1 percent and 2 percent, respectively.

Spending at gas stations rose 1.4 percent — the biggest gain since March 2011 as prices crept upward.

Car sales were down last month although, automakers reported an increase in sales, suggesting that discounts likely provided a boost.

Some economists have argued that an improving labor market is key to getting consumers back into the economy — 243,000 jobs were added in January, dropping the unemployment rate down to 8.3 percent. If those numbers can remain consistent during the next several months without interference from higher gas prices or the European debt crisis, the economic recovery could accelerate.

Consumers also are showing a willingness to take on more debt after spending the past several years — since the recession started in December 2007 — to save more and pay off their credit card bills.

Borrowing — auto and student loans and credit cards — saw some of the largest monthly gains in the past decade at the end of 2011.