Retail Sales Up a Bit

Not sure we should schedule the parade just yet, but this is some good news to ponder.

A new report released by the U.S. Commerce Department shows retail sales rose 0.5% in January, a moderate jump resulting from increasing demand for luxury goods, like electronics. Excluding purchases of cars, gas and building materials, the increases were significantly greater, with sales at general merchandise stores up 1.5%, the biggest gain since February of 2009. Economists believe the improvement was strengthened considerably by positive job trends, most notably a drop in the U.S. unemployment rate to 9.7%. The average workweek and weekly earnings of Americans also rose, according to government data.

Meanwhile, a separate survey of small-business owners showed a mix of hope and hesitation in January. An optimism index calculated by the National Federation of Independent Businesses rose 1.3 points last month to 89.3, a decided improvement compared to a year ago. However, survey respondents also admitted they are still having trouble securing credit and are hiring at a much slower pace then larger companies. While data shows 9% of small business owners increased staff in January, nearly 20% cut employees.

Adding to the complicated economic climate, the latest consumer-confidence numbers fell dramatically short of expectations, dipping unexpectedly. The initial February reporting of the Reuters/University of Michigan consumer sentiment index dropped to 73.7, slipping from a previous two-year high. An index of around 90 usually signals consistent economic growth.