Retail sales fall in February, but not all is lost: January sales turned out to be quite strong


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Retail sales fell in February, hampered by a severe cold spell in much of the country.

The numbers: Sales at U.S. retailers fell in February for the second time in three months in another sign of a slowdown infecting broad swaths of the economy early in the new year. The saving grace? Sales in January were much stronger than originally reported.

Retail sales dropped 0.2% last month, hurt in part by a severe cold spell across the country. Economists polled by MarketWatch expected sales to climb 0.3%.

Offsetting the surprise decline in sales last month was a bigger gain in January than initially recorded. The government on Monday revised sales in the first month of the year to show a 0.7% increase instead of 0.2%.

Read: U.S. economy grew a slower 2.2% in the fourth quarter, revised GDP figures show

What happened: Sales at gas stations rose 1% and auto dealers posted a 0.7% increase.

Yet most other retail segments struggled. Sales fell at home centers, electronic stores, home furnishers, groceries, apparel chains and department stores.

The retail report is often revised, however, and sometimes quite sharply as the January figures show.

Read: Gush of government spending that boosted economy last year is fading

Big picture: The economy has gotten off the another lousy start in the new year — a recurring pattern since the end of the Great Recession — and weaker consumer spending is a chief cause.

Read: A big increase in hiring in March would help soothe all the heartburn over the economy

The good news is, incomes are rising at the fastest rate in a decade and unemployment is hovering near a 50-year low. The strong labor market is likely to encourage more retail and other consumer spending in the months ahead, analysts say.

The bad news: Spending probably won’t increase as fast as it did last year, when households got a boost from the Trump tax cuts.

Read: The Fed is gun-shy because of a quarter-century of low inflation

Market reaction: The Dow Jones Industrial Average

DJIA, +0.82%

and S&P 500

SPX, +0.67%

were set to open sharply higher in Monday trades after fresh data showed stronger growth in the Chinese economy, the second largest in the world.

The 10-year Treasury yield

TMUBMUSD10Y, +2.02%

was little changed at 2.44%. Mortgages, auto loans and other common forms of borrowing are tied to changes in the 10-year note.

The yield has fallen steadily from a seven-year high of 3.23% in October owing to greater worries about the U.S. economy.

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