Consumer spending picks up in February

Consumers picked up their spending in February, a sign the improving labor market is bolstering the economic recovery. 

Retail sales were up 1.1 percent last month to a record $407.8 billion, the largest increase since September, the Commerce Department said Tuesday. 

The improvement marks 20 straight months of sustained year-over-year sales and a more than 20 percent gain above the recession low in March 2009. 

"Though February is typically a month for consumers to stay home and wait for spring, shoppers this year took advantage of mild weather to get a head start on outdoor projects and warm-weather apparel,” said Matthew Shay, president and chief executive of the National Retail Federation. 

"While February sales certainly present continued reason for optimism, retailers are paying close attention to rising gasoline prices, which are forcing millions of our customers to spend a significant portion of disposable income filling their gas tanks," he said. 

The NRF continues to forecast retail sales will rise 3.4 percent this year to $2.53 trillion.

The report showed a 1 percent increase in sales at sporting goods, hobby, book and music stores, a 1.6 percent jump in auto sales, 1.5 percent gain at department stores — the best performance since November 2010 — and a 1 percent increase at appliance and electronics stores. 

Homeowners took advantage of a mild winter, boosting sales at building material, garden equipment and supplies dealers by 1.4 percent. 

Sales at clothing and clothing accessories stores were up 1.8 percent.

“Pent-up demand is turning desires into needs, which is one reason why consumers have begun opening up their wallets,” said Jack Kleinhenz, NRF's chief economist. 

“There is no doubt that the economy is on the upswing, certainly compared to six months ago," he said. 

"Stronger-than-expected February sales and an improving labor market paint a bright picture of the U.S. economy, although the impact rising gas prices will have on the economy’s momentum remains unclear."

Hiring has eclipsed 200,000 jobs a month for the past three months — 227,000 jobs in February, 284,000 in January and 223,000 in November — for 734,000 total. 

The surge in sales was partially driven by a 3.3 percent increase in gasoline sales last month, as prices ticked up. 

Still, excluding gas, retail sales were up 0.8 percent.

The unemployment has dropped to 8.3 percent but remains elevated. 

In a separate Commerce report, business inventories increased 0.7 percent in January, while sales were up 0.4 percent.