U.S. retail sales increased 1.1 percent in February compared to January, as Americans spent at the fastest pace in five months, the government said Wednesday. According to a report from the Commerce Department, Americans continued spending last month despite higher Social Security taxes that took effect this year. Core retail sales, which exclude the volatile categories of gas, autos, and building supply stores, rose 0.4 percent in February compared with January, the report said. Economists were encouraged by the stronger-than-expected gain in sales, as some said the increase indicates that the economy may be growing faster in the January to March quarter than they had forecast. “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 U.S. 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 increases in January, according to the department. The February gain was the biggest since December. Sales at gas stations gained 5 percent, the biggest advance since a 6 percent rise in August. The report said that sales at general merchandise stores rose 0.5 percent in February, but the department store category as a whole fell 1 percent. The solid increase in retail sales showed that Americans kept spending despite a payroll tax increase that has lowered take-home pay this year for most workers. Someone earning $50,000 has about $1,000 less to spend in 2013. A household with two high-paid workers has up to $4,500 less.
