January retail sales dropped 0.9%, entirely because of weak auto sales. Retail sales excluding autos rose 1.3%. The key to the report is the strength in sales excluding autos, since the gain for January was not only was well above expectations, but previous data was also revised higher. The market had expected a 0.5% drop in overall retail sales, and a 0.4% gain in sales excluding autos.
This continues to support MMS International's view that consumption will post another solid quarter of growth in the first quarter following the lull in the fourth quarter. This will continue the strong-weak alternating pattern seen for all of 2002.
In the report, sales of autos and auto parts dropped 7.5% after jumping a revised 7.9% (previously reported as an increase of 5.0%). The revision actually helped put the swing in the data more on par with the unit sales data. Unit sales of autos dropped to 16.1 million after jumping to 18.3 million in December.
As for the other components, strength was led by building materials (+2.9%), gasoline service stations (+2.7%), grocery stores (+2.6%), restaurants (+1.1%), and health and personal care (+1.1%). Holding back sales, however, was electronic stores (-1.4%) and furniture (-1.3%).
Overall, the data leave year-over-year consumption trends hovering around 4.0% -- clearly a healthy level. The data suggest that real consumption will grow at a 4.0% to 4.5% rate in the first quarter, which suggests GDP growth could approach 4%. The upward revisions also suggest growth could be higher for the fourth quarter.
Weekly Jobless Claims Drop
Initial claims for unemployment insurance fell 18,000, to 377,000 in the week ending Feb. 8.
The four-week average rose 3,500 to 389,000. The figure has been below 400,000 for four of the last five weeks, an improvement from the above-400,000 readings in November and December.
The number of workers receiving benefits fell 12,000 to 3,312,000, keeping the insured unemployment rate at 2.6%.
The report shows some improvement in the labor market from late last year, although the picture is still flat, not growing. Layoffs are coming down, notes S&P, but hires don't seem to be picking up.
From MMS International and S&P MarketScope