Washington, DC, Feb. 13--Sales at the nation's retailers dropped 0.9% in January from the previous month. According to the Commerce Department, the decline in retail sales followed a 2% rise in December, the biggest drop in four months and a weaker performance than the 0.6% drop that analysts were predicting.
However, excluding automobile sales, retail sales actually rose by 1.3% in January, the biggest gain since September 2000. That marked an improvement over the small 0.2% advance in December and much stronger than the 0.5% rise economists were expecting.
Sales at automobile dealers declined 7.5% in January, the biggest drop since November 2001, after a consumer buying binge in December, when auto sales jumped 7.9%.
Other sectors saw a healthy increase. Sales at building and garden supply stores rose 2.9% in January, following a 1.2% decline. At department and other general merchandise stores, sales rose 0.6%, up from a 0.4% increase. At health and beauty stores, sales went up 1.1%, better than the 0.2% decrease in December.
Sales of sporting goods, books and music rose 0.3% in January, a turnaround from the 0.9% drop the month before. Food and beverage stores saw sales rise 2.6% last month, following a 1.3% decline. At bars and restaurants, sales rose 1.1%, down from a 2% advance.
The Federal Reserve last month decided to leave a key interest rate at a 41 year low of 1.25%, with the hope that will encourage consumers and businesses to spend and invest more and help along the recovery.
One of the main forces holding back the recovery is the wariness of businesses to make big commitments in hiring and in capital spending, given worries about a possible war with Iraq, tensions with North Korea and other economic uncertainties.
Fed chairman Alan Greenspan told Congress this week that he was hopeful that once such geopolitical uncertainties lift, businesses would be much more willing to step up capital investment and hiring, forces that would boost economic growth.
Greenspan said that if geopolitical uncertainties do lift and businesses remain reluctant to quicken their operating pace, which would signal a deeper problem within the economy, then other monetary or fiscal policy actions may be warranted.
