Retail Sales Jumped 1.4% For February --- Strong Increase Conflicts With Signs of Factory Weakness; Imports Cited
WASHINGTON -- Retail sales jumped a surprising 1.4% in February, the Commerce Department said.</br></br>The big increase suggests consumer spending continues to be strong in spite of signs of weakness among the nation's manufacturing industries. Manufacturing employment declined last month, and many analysts believe that February industrial-production figures, to be reported tomorrow, will also show a decline.</br></br>This combination of strong demand and weak production suggests to many analysts that foreign manufacturers are taking a rapidly growing share of the U.S. market as this country's trade deficit widens.</br></br>"Thanks to the strong dollar, imports are clearly gaining market share," said Edward Yardeni, chief economist for Prudential-Bache Securities Inc. A strong dollar makes imports less expensive and makes U.S. exports less competitive on world markets.</br></br>"Until recently, the demand side has been sufficiently vigorous that it has provided growth for everybody," Mr. Yardeni said. "But I think we are now seeing signs that imports are starting to have a detrimental impact." Mr. Yardeni believes that the problems facing manufacturers will eventually depress consumer demand by reducing employment and personal income.