Retail sales up modestly but recovery advances

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Fears of a sharp slowdown in the U.S. economy have faded in recent weeks on signs that the job market is picking up and manufacturing is accelerating. Confidence among small U.S. business owners hit a four year-high in January, the National Federation of Independent Business said on Tuesday.

With the economy strengthening, there is a good chance the Federal Reserve will raise interest rates before the end of 2014, according to a Reuters poll. The Fed has said it expects to hold rates low through the end of that year.

Still, with the unemployment rate at 8.3 percent in January, a significant minority of economists still expect a further easing of monetary policy in coming months.

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Graphic on U.S. retail sales: http://link.reuters.com/guc66s

Graphic on U.S. import/export prices: http://link.reuters.com/muc66s

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In the retail sales report, spending at gasoline stations rose 1.4 percent - the biggest gain since March 2011 - while receipts for electronics increased 0.5 percent.

Dampening the overall increase, sales of cars and autoparts dropped 1.1 percent, while shopping at nonstore retailers, a category dominated by online sales, also fell 1.1 percent.