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Last Updated: Tuesday, 15 February, 2005, 15:06 GMT
Cars pull down US retail figures
A shopper in Ohio
US shoppers are expected to continue spending in 2005
US retail sales fell 0.3% in January, the biggest monthly decline since last August, driven down by a heavy fall in car sales.

The 3.3% fall in car sales had been expected, coming after December's 4% rise in car sales, fuelled by generous pre-Christmas special offers.

Excluding the car sector, US retail sales were up 0.6% in January, twice what some analysts had been expecting.

US retail spending is expected to rise in 2005, but not as quickly as in 2004.

'Healthy numbers'

Steve Gallagher, US chief economist at SG Corporate & Investment Banking, said January's figures were "decent numbers".

US consumers continue to retain their strength in the first quarter
Analyst Parul Jain

"We are not seeing the numbers that we saw in the second half of 2004, but they are still pretty healthy," he added.

Sales at appliance and electronic stores were down 0.6% in January, while sales at hardware stores dropped by 0.3% and furniture store sales dipped 0.1%.

Sales at clothing and clothing accessory stores jumped 1.8%, while sales at general merchandise stores, a category that includes department stores, rose by 0.9%.

These strong gains were in part put down to consumers spending gift vouchers they had been given for Christmas.

Continued growth?

Sales at restaurants, bars and coffee houses rose by 0.3%, while grocery store sales were up 0.5%.

In December, overall retail sales rose by 1.1%. Excluding the car sector, sales rose by just 0.3%.

Parul Jain, deputy chief economist at Nomura Securities International, said consumer spending would continue to rise in 2005, only at a slower rate of growth than in 2004.

"Consumers continue to retain their strength in the first quarter," he said.

Van Rourke, a bond strategist at Popular Securities, agreed that the latest retail sales figures were "slightly stronger than expected".

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