U.S. Retail Sales Rose 0.4% in Jan, Lower Than Expected

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Spending at department stores was unchanged from December, while receipts for motor vehicles and parts dropped 1.1 percent.

Core retail sales, which exclude autos, gasoline and building materials, rose 0.7 percent in January. That's better than economists' forecast of a 0.5 percent rise.

The report said sales at sporting goods, hobby, book and music stores rose four percent, while building material and garden equipment supplies dealers saw their sales rise 3.5 percent.

Sales at food and beverage stores rose 1.3 percent in December. Also contributing to the overall gain in sales, receipts at gasoline stations climbed 1.4 percent last month.

The Labor Department's latest snapshot of the job market showed employers have been hiring more in recent months, with 243,000 net new jobs added in January. The unemployment rate now stands at 8.3 percent, down from 8.5 percent a month earlier and from 9.1 percent as recently as last August. Initial jobless claims are now below the 400,000 threshold for 12 out of the last 14 weeks.

Auto Sales

Although the annual rate of auto sales rose in January to the highest level in nearly three years, it appears that auto makers sharply discounted prices.

"We've been seeing strength in the automotive sector for a while, but it really took off in January," said Michael Brown, an economist at Wells Fargo Securities LLC in Charlotte. "Indications are, it's probably going to stay that way for a little while, which is good news for consumer spending."

In January, purchases of light trucks and cars continued their upward surge, rising 11 percent over a year ago to 913,287, according to Autodata Corp. The annualized sales pace in January was 14.18 million vehicles, the highest sales rate for the industry since August 2009, when the U.S. government was running the "cash for clunkers" trade-in incentive program.