REUTERS FORECASTS:

The median forecast for retail sales is for a rise of 0.3 percent after a 0.3 percent fall in December. Forecasts range from a drop of 1 percent to an increase of 0.8 percent.

The median forecast for sales excluding autos is for an increase of 0.5 percent in January after a 0.2 percent fall the prior month. Forecasts range from a fall of 0.5 percent to a gain of 1.1 percent.

FACTORS TO WATCH:

Weak auto sales probably held back U.S. retail sales in January. Unit auto sales fell 4 percent from December to an annualized 10.8 million units as Toyota slumped on a massive vehicle recall. In addition, a rise in dealership incentives from the prior month likely lowered the dollar value of auto sales in January.

Excluding autos, sales at U.S. retailers likely rose a bit more solid, lifted by strong gasoline receipts. Chain store sales recorded gains in January, but unusually cold temperatures could have hit sales of building materials.

Core retail sales -- excluding autos, gasoline and building materials -- probably resumed their upward trend after stumbling in December.

The U.S. economy resumed growth in the second half of 2009, largely driven by government stimulus and businesses being less aggressive in liquidating stocks of unsold merchandise. Retail sales are being anxiously watched for signs whether households are healthy enough to take over the baton from the government and drive the economic recovery.

Consumer spending normally accounts for more than two-thirds of U.S. economic activity, but high unemployment is constraining households' capacity to spend. However, there are signs the labor market is close to turning, with factory employment gaining in January for the first time in three years. The average workweek rose to its highest level in a year last month.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

Retail sales Toyota Retail