WASHINGTON - US retail sales rose 0.5 percent in February, the Commerce Department said Tuesday, underlining that American consumers retain a healthy appetite for spending.
The figure suggests that the Federal Reserve will stick to its policy of gradually tightening interest rates to keep a lid on inflation, analysts said.
The Commerce Department revised up the January sales figure to show a rise of 0.3 percent, against a fall of 0.3 percent announced previously.
The February increase in sales was led by purchases of electronics, clothing, gasoline and food outside the home.
The total rise was just below the market consensus for an increase of 0.6 percent in February sales. But motor vehicle sales surprisingly went up 0.7 percent in the month.
Excluding autos, which account for a quarter of all sales, retail purchases increased 0.4 percent, half the market consensus.
"Retail sales have been healthy since the beginning of the year, which reinforces the view that US first quarter GDP growth could surprise on the high side," IXIS Corporate and Investment Bank economist Marie-Pierre Ripert said.
"This statistic is bearish for US Treasury notes, as it suggests that the Fed will continue to tighten its monetary policy at least at a measured pace," she told clients in a research note.
Retail sales represent about half of US consumer spending and about a third of gross domestic product (GDP).
Analysts expect the US central bank`s Federal Open Market Committee to raise the benchmark interest rate by another quarter-point to 2.75 percent when it meets next week.
Aside from rising oil prices, which feed into higher petrol pump sales, steady job growth and a surge in tax refunds are propelling sales, economists said.
"My emphasis is that the consumer is resilient because they look at the labour situation," Bear Stearns economist David Malpass told CNBC.
Malpass said the retail sales figure underlined his view that the Federal Reserve will soon start switching to half-point increases in interest rates.
"I think they have been signaling that they`re ready to reduce the accommodation," he said.
03/15/2005 14:30 GMT