U.S. retail sales were unchanged in January as falling sales for cars, gasoline, and electronics offset gains by clothing and home improvement stores.

In a separate report, the U.S. government said business inventories held steady in December, the poorest showing in 17 months.

Retail sales last month were flat last month on a seasonally adjusted basis, the U.S. Commerce Department said today. December sales surged 1.2%, revised higher from a previously reported 0.9% advance.

Wall Street had expected an increase in January sales. Economists had forecast overall sales rising 0.4% in the first month of 2007.

Strong spending propelled the economy at the end of 2006, when it grew a surprisingly robust 3.5%, according to a recent early estimate for fourth-quarter growth. But demand for big-ticket items such as cars trailed off as the new year unfolded. Auto and parts sales fell 1.3% in January, after increasing 1% in December.

Sales at all retailers other than auto and parts dealers climbed by 0.3%. Sales excluding autos were 1.3% higher in December.


Meanwhile U.S. business inventories didn’t budge in December, the latest period for which data are available, as sales surged and dealers depleted excess stocks of unsold cars and trucks.

Inventories held steady, as expected, at a seasonally adjustedUS $1.366 trillion, after a downwardly revised 0.2% increase in November, the Commerce Department said today.

Business sales surged 1.4% to $1.066 trillion in December, after November’s 0.5% gain. The inventory-to-sales ratio fell to 1.28 from 1.30.