Strong US retail figures boost recovery hopes

The US economy showed continued signs of recovery early this year, with retailers posting their best monthly sales performance since before the recession began in 2007.  The 3.7 percent gain, which beat analystsÔÇÖ expectations, showed that shoppers are starting to spend more, with many willing to pay for certain higher-end goods.  The February sales report was the third consecutive monthly increase, according to the International Council of Shopping Centers (ICSC). The trade group, which analyzes data from 29 chain stores, was expecting only a two percent increase.  Luxury stores sales grew the most in February, by 10.9 percent. Discount stores however, grew by only 2.9 percent.  The figures are based on sales at stores open at least a year and are considered a key indicator of retailing health.  The results are especially encouraging since February, which lies between post-holiday clearances and spring, is the second-least important month of the year for retailers after JanuaryÔÇöespecially for clothing retailers, who concentrate on bringing in new spring lines and clearing out winter stock.  The figures were also impressive in the light of the severe winter that swept the east coast, which apparently did not keep shoppers away from stores. According to the ICSC, the results would have been even stronger without the storms, which dragged down sales by one percentage point.  Industry experts have attributed the rise in retail sales in the main to the return of affluent consumers, who cut their spending despite remaining in employment throughout the recession. It is now thought that fewer shoppers are curtailing their spending or trading down products or stores.  It is estimated that currently, around two-thirds of consumers are continuing to rein in their spending as a result of the recession, compared with three-quarters who were doing so in August 2008.  Retailers are said to have been keeping their inventories lean over the past couple of years, meaning that they have not had to resort to huge discounts, which has keep profitability up.  February also benefited from favorable comparisons with the same month a year earlier, when consumers dramatically cut their spending during the depth of the recession, shopping only for heavily discounted merchandise.  Consumer spending represents about 70 percent of the US economy. Economists are therefore counting on employed consumers to help drive a sustained recovery. ┬á