Sales at U.S. retailers slowed in January as extreme weather in large parts of the country kept some shoppers at home, but the underlying improving trend in spending remained intact.

Total retail sales rose 0.3 percent, the Commerce Department said on Tuesday, advancing for a seventh straight month. Sales rose 0.5 percent in December.

Economists polled by Reuters had expected retail sales to increase 0.6 percent last month. Compared to January last year sales were up 7.8 percent.

Seventy percent of the country was covered by snow in January so, if anything, it's a miracle the consumer didn't just hibernate, said Chris Rupkey, chief financial economist at Bank of Tokyo/Mitsubishi UFJ in New York.

Economists also noted that sales were taking a breather after recent hefty gains and expected the upward trend to resume, spurring the economic recovery. The U.S. economy grew at a 3.2 percent annual rate in the fourth quarter of 2010, powered by robust consumer spending.

However, revisions to the retail sales data from prior months suggested fourth-quarter growth may not have been quite as robust as first reported. Barclays Capital economist Theresa Chen said she lowered her estimate for fourth-quarter spending growth to 4.2 percent from an initially reported 4.4 percent.

U.S. stock index futures edged lower after the data onTuesday, while government debt prices pared losses. The U.S. dollar trimmed gains versus the yen.


Excluding autos, sales increased 0.3 percent last month, below economists' expectations for a 0.5 percent gain, after rising 0.3 percent in December.

Sales last month were held back by a 2.9 percent drop in receipts at building material and gardening outlets after rising 1.8 percent in December. Sales at food services and drinking places fell 0.7 percent, while receipts at clothing and clothing accessories stores slipped 0.3 percent.

But so-called core retail sales, which exclude autos, gasoline and building materials, increased 0.5 percent after slipping 0.1 percent in December.

Core sales correspond most closely with the consumer spending component of the government's gross domestic product report. Consumer spending, which accounts for 70 percent of U.S. economic activity, increased at a 4.4 percent annual rate in the fourth quarter.

January sales at some major U.S. retail chains came in well ahead of analysts' expectations, showing that shoppers who braved snowstorms were buying, not just browsing.

Still, experts predict that people will largely remain frugal and focus on bargains this year.

Higher prices on food and cotton apparel are adding pressure to shoppers whose budgets were already being pinched at the gasoline pump.

Those higher prices will help lift sales at a variety of chains, including Wal-Mart, even if the number of shoppers coming into the stores remains sluggish.

A separate report from the New York Federal Reserve showed a gauge of manufacturing in New York State climbed to 15.43 in February, the best since June and up from 11.92 in January.

Economists polled by Reuters had expected a reading of 15.00. The report was the latest to the manufacturing sector remains strong, even as the inventory rebuilding cycle starts to wind down.

(Reporting by Lucia Mutikani; Additional reporting by Ellen Freilich in New York and Jessica Wohl in Chicago)