|Month over Month||0.2%||-0.2%||0.1%||0.2%|
|Year over Year||0.1%||1.7%||1.2%|
Any hopes that January's (upwardly revised) increase in retail sales was the start of a long overdue change in trend proved premature as purchases unexpectedly fell 0.2 percent on the month in February. Compared with a year ago unadjusted sales were up just 0.1 percent after a 1.2 percent rise last time.
Disappointingly, discretionary demand was also weak as non-food purchases dipped a monthly 0.1 percent, their fourth drop in the last seven months. Food sales matched the headline decline although this failed to offset a 0.4 percent spurt at the start of the year.
Despite February's reversal, the trend in overall retail sales has improved in recent months and is now broadly flat. Indeed, average purchases in January/February were 0.1 percent above their fourth quarter average and so hold out the promise of a positive contribution to first quarter real GDP growth. Moreover, according to the Istat survey, buying intentions improved sharply in March which, if mirrored in actual spending, would suggest that the consumer sector was building up some genuine momentum entering the current quarter.
That said, actual sales have only posted two monthly rises since last April and even then, nothing in excess of 0.2 percent. Any recovery is in its very early stages.
Retail sales measure the total receipts at stores that sell durable and nondurable goods. The monthly change in the headline figure, which is reported in volume terms, is only disaggregated into food and non-food categories.
With consumer spending a large part of the economy, market players continually monitor spending patterns. Retail sales are a measure of consumer well-being. The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.
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