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Market Update

Retail Sales, Inventories Data Lead to Higher U.S. Growth Estimates

Author: Nichole Harper
Last Update: 12:00 PM ET March 13 2013

11:55 AM New York Economists lifted economic growth projections after retail sales increased at the fastest pace in five months in February and business inventories rose the most in a year and a half in January. Energy stocks were in focus in New York trading.

Stocks struggled to stay near flat line after retail sales increased at the fastest pace in five months and business inventories rose at the fastest clip in a year and a half.

Economists lifted economic growth projection for the current quarter after the release of two separate reports from the Commerce Department.

Market indexes opened lower and the ongoing global worries and indexes appeared in a consolidation phase after a global rally that lifted indexes in the last five months.

February Retail Sales Up 1.1%

Retail sales increased 1.1% in February from the revised 0.2% gain in January, according to the Commerce Department.

The monthly sales increased at the fastest pace in five months despite the end of 2% payrolls tax cut and an increase in tax rate for 1% of wealthy Americans.

Excluding autos, sales increased 1%, the largest increase in five months and despite the 35 cents increase in gasoline cost at pump stations more consumers shopped for automobiles.

Core sales excluding autos, gasoline and building materials, the data used to calculate gross domestic product, increased 0.4% after rising 0.3% in January.

Sales at gasoline stations increased 5% in February, the largest increase since August and after rising 0.6% in January.

Sales at apparel stores increased 0.2% in the month and at building materials and garden equipment supplies gained 1.1%, on the momentum in the home building.

Business Inventories Up 1%

January inventories increased 1%, the fastest increase since May 2011 according to the data released by the Commerce Department today.

At the January rate of sales pace, inventory to sales ratio increased to 1.29 months, up from 1.28 months in the previous months. The ratio of inventories to sales was the highest since August.

Business sales decreased 0.3% in February and retailer sales gained 0.3% in January after a 0.4% increase in the previous month.

Retail inventories excluding auto sales that are included in the calculation of gross domestic product registered the largest increase since August 1995.

In international trading, European markets traded lower after euro zone factory output fell sharply in January and Italy paid the highest interest rate on new 3- and 15-year government bonds totaling 5.32 billion euros.

The euro fell against the dollar after January factory orders declined 0.4%, more than expected.

Stocks in Review

Dole Foods (DOLE) dropped 8% after the fresh produce supplier reported wider-than-expected loss in the fourth quarter and revenues fell more than expected. The company blamed difficult banana market conditions.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc