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Strong retail sales signal improving economy
NEW YORK (AP) — Many retailers reported strong sales gains for February in the latest sign that Americans are feeling more confident in the economy.
As merchants reported their monthly sales figures Thursday, a diverse group including Target Corp., Macy's Inc. and Limited Brands Inc. reported sales gains that exceeded Wall Street estimates. Even Gap Inc., long mired in a sales slump, posted an unexpected increase.
The figures, based on revenue at stores opened at least a year, are considered an indicator of a retailer’s health. Only a small group of retailers report monthly sales figures. But industry watchers say those merchants that do post monthly numbers offer a snapshot of consumer spending, which accounts for more than 70 percent of all economic activity.
“This was a very strong month. A new life has been breathed into the retailers,” said Ken Perkins, president of Retail Metrics, a research firm. “Consumers are starting to feel much better about their overall situation.”
Overall, merchants on Thursday reported a 6.7 percent increase for February, according to the International Council of Shopping Centers‘ tally of 20 retailers. That’s the biggest gain since June 2011, when the index was up 6.9 percent as shoppers took advantage of deep promotions on summer merchandise.
An unusually mild winter, which depressed sales of cold-weather goods such as coats during the holiday season, turned out to be a blessing in February, when it helped to kick off spending of spring merchandise. But what had a bigger impact is the improving economy, which boosted shoppers’ moods during the month to the highest level in a year, according to a widely-watched barometer of consumer confidence released yesterday by private research group the Conference Board.
Americans particularly are encouraged by the improving job market. The government reported that the unemployment rate fell to 8.3 percent, the lowest in three years and the first time since 1994 that unemployment has dropped five months in a row.
Figures released Thursday showed more signs of improvement: The government reported the number of people seeking unemployment benefits fell slightly last week to the lowest point in four years. Economists expect employers to add another 210,000 jobs when job figures for February are out next Friday. The unemployment rate should remain unchanged.
The government also reported Thursday that consumers earned a little more in January and spent most of the extra money. The gains should keep the economy growing at a modest pace.
Meanwhile, Wall Street hit two milestones. The Nasdaq composite index briefly touched 3,000 on Wednesday for the first time since the collapse in dot-com stocks more than a decade ago. Stocks ended lower, but it was still the best February on Wall Street in 14 years. That came a day after the Dow Jones industrial average closed above 13,000 for the first time since May 2008.
But there are reasons for some caution. Rising gas prices could threaten consumer spending, particularly among the low- to middle-income shopper. The price of gas has jumped 45 cents since Jan. 1 and is the highest on record for this time of year, an average of $3.73 a gallon.
That didn’t seem to hurt retailers’ February results.
Target’s sales rebounded after a muted holiday shopping season. Its key sales figure rose 7 percent in February as more people came to stores and spent more on core categories such as food and health-care products. Analysts expected a 5.2 percent rise. Excluding the Easter months, which skew results, Target’s increase was the biggest since November 2007, when the figure soared 10.8 percent. That was one month before the recession officially started.
Limited Brands Inc., which operates Victoria’s Secret and Bath and Body Works, had an 8 percent increase in revenue at stores opened at least a year. That’s better than the 6.2 percent gain analysts had expected.
Limited Brands has found a niche with its chains, which offer Americans lingerie and beauty and bath products, small luxuries that people will buy for themselves despite the uncertain economy.
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