Retail Sales: Concerning Trend

Bottom Line: Retail sales growth was slower than expected in February. With sales falling at the headline level due to lower gasoline prices and slower auto sales, core sales grew less than expected. Non-store (internet) retailers saw gains, as did building supply stores, and sporting goods and hobby retailers, while furniture and appliance sellers saw declines. Overall, the last 3 months (which includes the December holiday season) shows a marked deceleration in the pace of core sales growth (and an outright decline at the headline level), suggesting the overall trend in retail is mixed at best. Of course, personal income tax cuts should boost spending in the coming quarters -- but that remains to be seen. Retail Sales FELL by 0.1% in February, compared with the market consensus for an increase of 0.3%. The January estimate was revised from -0.26% to -0.12%. Retail sales are now 4.0% ABOVE their year ago level; just a year ago, the year over year growth rate was 4.9%. Spending at motor vehicle dealers fell by 0.9%. Core Retail Sales ROSE by 0.2%, compared with the market consensus for an increase 0.4%. The January estimate was revised from 0.00% to 0.08%. Core retail sales are now 4.4% ABOVE their year ago level; just a year ago, the year over year growth rate was 5.0%.

• In February, gains at building materials (+1.9%), nonstore retailers (+1.0%), sporting goods, hobbies, etc. (+2.2%), and clothing stores (+0.4%) were partially offset by declines in gasoline stations, primarily due to low gasoline prices (-1.2%), general merchandise stores (-0.4%), health and personal care (-0.4%), furniture & home furnishing (-0.8%).

Core Retail Sales ex Gasoline ROSE by 0.31% and are now 4.0% ABOVE their year ago level; just a year ago, the year over year growth rate was a moderate 3.6%.