Business

Retail spending rises 1.1%, more than expected

WASHINGTON — Americans spent at the fastest pace in five months in February, boosting retail spending 1.1 percent, compared with January. About half the jump reflected higher gas prices, but even excluding gas purchases, retail sales rose 0.6 percent.

Wednesday’s Commerce Department report showed consumers kept spending despite higher Social Security taxes that took effect this year. The retail sales report is the government’s first look each month at consumer spending, which drives about 70 percent of economic activity.

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Core retail sales, which exclude the volatile categories of gas, autos, and building supplies, rose 0.4 percent.

The stronger-than-expected gains encouraged economists. Some said the increase means the economy may have been growing faster in the January-March quarter than they had forecast.

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‘‘This all suggests that the hit to spending from the payroll tax cut and higher gasoline prices, which reduce the amount of cash available to spend on other items, hasn’t been too bad,’’ said Paul Dales, senior US economist at Capital Economics. ‘‘The recent pickup in both employment and earnings growth bodes well for consumption growth later in the year, too.’’

Auto sales rose 1.1 percent after a 0.4 percent January increase. The February gain was the biggest since December. Sales at gas stations surged 5 percent, the most since a 6 percent rise in August.

Sales at general merchandise stores rose 0.5 percent in February. But the department store category fell 1 percent.

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The economy added 236,000 jobs in February, driving the unemployment rate down to 7.7 percent, its lowest level in more than four years. The gains signaled that companies are confident enough in the economy to intensify hiring even in the face of tax increases and government spending cuts.

Since November, employers have added an average of 205,000 jobs a month, up from 154,000 a month in the previous four months. The hiring has been fueled by steady improvement in housing, auto sales, manufacturing, and corporate profits, along with borrowing rates.

An improving in job market has also helped lift consumer confidence.

Many analysts believe the US economy will grow a modest 2 percent this year. While job gains should help provide some momentum, growth will likely be held back by uncertainty about the federal budget, higher Social Security taxes, and across-the-board government spending cuts that kicked in March 1.

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