/www.bloomberg.com/ Washington, (Bloomberg) -- U.S. retail sales fell in January for the first time in four months as purchases of automobiles slowed from the best December on record, a government report Thursday is expected to show.
Sales declined 0.6 percent last month following a 1.2 percent auto-led surge in December, economists said they expect the Commerce Department to report. Excluding vehicles, retail sales probably gained 0.5 percent as shoppers took advantage of post- holiday discounts, a survey of economists found.
Consumer spending, which accounts for more than two-thirds of the economy, may be strong enough to keep the recovery going and boost manufacturing. Job growth may boost demand in coming months after companies added workers in January for the first time in three months.
``The labor market is stabilizing, and that means consumers have the wherewithal to spend,'' said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi Ltd. in New York. ``That suggests production will turn up from here.''
The Federal Reserve is expected to report Friday that industrial production increased 0.3 percent in January, the biggest rise since July, based on the median of 48 forecasts on a Bloomberg News survey. Fed Chairman Alan Greenspan tomorrow and Wednesday may indicate in testimony to Congress that the pickup in manufacturing, consumer spending and hiring is a sign the economy is set to strengthen once the prospect of a war with Iraq is resolved.
``He'll say as uncertainties constraining the economy lift, the outlook could be brighter,'' Rupkey said. ``He will be confident the soft patch is behind us.''
Lure of Discounts
Price cuts on winter shoes and clothing attracted consumers last month as retailers discounted leftover holiday merchandise. The expected rise in retail sales excluding autos reflects the median of 60 forecasts in a Bloomberg News survey.
Wal-Mart Stores Inc. reported a 2.3 percent increase in January sales at stores open at least a year, the low end of the world's largest retailer's forecast. Gap Inc., the biggest U.S. clothing-store chain, saw a 16 percent increase in January same- store sales. Both retailers said earnings exceeded forecasts.
Overall same-store sales rose 1.8 percent last month, according to the Bank of Tokyo-Mitsubishi Ltd. While that was the smallest January gain since 1996, it was more than the firm's estimate for a rise of as much as 1.5 percent. Same-store sales exclude results from new or closed stores.
Auto sales slowed to a 16.2 million annual rate in January after reaching an 18.6 million pace in December, according to auto industry figures. General Motors Corp. and Ford Motor Co., the world's two largest automakers, have been relying on discounts such as no-interest loans and $2,500 rebates to attract customers.
The surge in auto sales in December was enough to cause automakers to bump up production in January, according to Steven Wood, chief economist at Insight Economics in Walnut Creek, California. In addition, he said, ``colder winter weather boosted utility production, while higher petroleum prices lifted mining output.''
Surging Oil Prices
Crude oil prices rose to a 26-month high Friday as expectations of war with Iraq increased. Crude oil for March delivery jumped to $35.12 a barrel, the highest closing price since Nov. 27, 2000. That is boosting consumer costs for gasoline, heating oil and other energy. It is also restraining consumer sentiment.
The University of Michigan's confidence index probably eased to 82 in February from 82.4 in January, according to economists surveyed by Bloomberg. That report is scheduled for release Friday.
Rising energy costs probably lifted import prices in January by 0.8 percent, economists said the Labor Department will probably report Thursday. That would follow a 0.7 percent rise in December.
Other reports this week:
Also on Thursday, the Labor Department will probably report that first-time jobless claims fell to 390,000 in the week that ended Saturday from 391,000 in the prior week.
On Friday, the Commerce Department will probably report that business inventories increased 0.2 percent in December, matching the November rise. *T
Bloomberg Survey
Date Time Period Indicator BN Survey Prior 02/13 8:30 Jan. Import Prices 0.8% 0.7% 02/13 8:30 2/8 Initial Jobless Claims 390K 391K 02/13 8:30 Jan. Retail Sales -0.6% 1.2% 02/13 8:30 Jan. Retail Sales Ex-autos 0.5% 0.0% 02/14 8:30 Dec. Business Inventories 0.2% 0.2% 02/14 9:15 Jan. Capacity Utilization 75.6% 75.4% 02/14 9:15 Jan. Industrial Production 0.3% -0.2% 02/14 10:00 Feb. P Confidence- U. of MI 82.0 82.4 *T