The Census Bureau reported that retail sales rose much faster in February than in recent months, up 1.1 percent. This was the fastest pace since September, with January sales increasing 0.6 percent (a revised level). The two sectors with the strongest growth were gasoline stations (up 3.3 percent, due to higher prices) and motor vehicles and parts (up 1.6 percent, reversing last month’s 1.6 percent decline). If you exclude autos and gasoline, retail sales rose 0.6 percent, below the 1 percent gain of January.
Outside of those sectors, though, the news was mostly positive. These included clothing and accessories (up 1.8 percent), building materials (up 1.4 percent), electronics and appliances (up 1 percent), sporting goods and hobbies (up 1 percent) and nonstore retailers (up 1 percent). The only businesses with lower retail sales in February were furniture and home furnishings (down 1.2 percent) and general merchandisers (down 0.1 percent). Warm weather and improvements in the economy have helped to lift consumer spending.
Year-over-year gains in retail sales indicate a 6.5 percent increase since February 2011. Among the sectors with the fastest yearly sales growth are building materials (up 13.8 percent), gasoline stations (up 10.3 percent), furniture and home furnishings (up 8.3 percent), clothing and accessories (up 7.3 percent) and motor vehicle and parts (up 6.9 percent).
Meanwhile, the Census Bureau also announced new business inventory figures for January. Total inventories rose 0.7 percent, its fourth straight month of healthy increases. Retail inventories led the gain, up 1.1 percent, aided by higher auto sales. Motor vehicle inventories grew by 2.6 percent for the month. Manufacturing inventories grew 0.6 percent, which was stronger than the 0.2 percent increase in December. In addition to motor vehicles, other sectors with large increases in inventories include building materials (up 1.1 percent) and clothing and accessories (up 0.8 percent).
As noted in previous releases, the inventory-to-sales (I/S) ratios remain mostly constant, especially as businesses have done a good job with inventory control. The current I/S ratio for manufacturing is 1.33, which is unchanged from the previous month.
Chad Moutray is chief economist, National Association of Manufacturers.