| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Retail Sales - M/M | -0.3% | -1.2% to 0.6% | -0.4% | 3.0% | 3.2% |
| Ex-Vehicles - M/M | 0.2% | -0.7% to 0.8% | -0.1% | 2.3% | 2.4% |
| Ex-Vehicles & Gas - M/M | -0.9% | -1.0% to 0.5% | 0.0% | 2.6% | 2.8% |
Highlights
Total retail and food services sales are down 0.4 percent in February after small upward revisions to up 3.2 percent in January and down 0.8 percent in December. The February percent change is just below the consensus of down 0.3 percent in an Econoday survey. Taken with the upward revisions in the prior months, the report is actually a little better than expected and gets the first quarter 2023 off to a decent start for consumer spending.
Retail excluding motor vehicles is down 0.1 percent, a little below the consensus of up 0.2 percent in an Econoday survey. Motor vehicle sales declined 1.8 percent from the prior month while January was up 7.1 percent. Retail excluding motor vehicles and gasoline are unchanged from the prior month. This is above expectations of down 0.9 percent in an Econoday survey. Sales at gasoline stations are down 0.6 percent in February after the 1.0 percent decrease in the prior month.
Retail spending was mixed in February and largely represents a pullback in spending after the strong readings in January. However, these do not entirely erase the gains in the prior month.
Spending at restaurants and bars dips 2.2 percent in February from a 5.6 percent rise in January. Clothing store spending is down 0.8 percent in February but is up 2.9 percent for January. Department store sales receipts decline 4.0 percent in February after the 18.1 rise in January. Furniture and home stores are down 2.5 percent in February following a 5.7 percent increase in January.
Spending at food and beverage stores is up 0.5 percent in February after declining 0.4 percent in January. Spending at health and personal care stores is up 0.9 percent after up 3.1 percent in the prior month.
Sales at nonstore retailers which includes etailers is fairly steady at up 1.6 percent in February after up 1.8 percent in January. Nonstore retail sales account for 16.2 percent of total retail in February, up from 15.8 percent in January.
Retail excluding motor vehicles is down 0.1 percent, a little below the consensus of up 0.2 percent in an Econoday survey. Motor vehicle sales declined 1.8 percent from the prior month while January was up 7.1 percent. Retail excluding motor vehicles and gasoline are unchanged from the prior month. This is above expectations of down 0.9 percent in an Econoday survey. Sales at gasoline stations are down 0.6 percent in February after the 1.0 percent decrease in the prior month.
Retail spending was mixed in February and largely represents a pullback in spending after the strong readings in January. However, these do not entirely erase the gains in the prior month.
Spending at restaurants and bars dips 2.2 percent in February from a 5.6 percent rise in January. Clothing store spending is down 0.8 percent in February but is up 2.9 percent for January. Department store sales receipts decline 4.0 percent in February after the 18.1 rise in January. Furniture and home stores are down 2.5 percent in February following a 5.7 percent increase in January.
Spending at food and beverage stores is up 0.5 percent in February after declining 0.4 percent in January. Spending at health and personal care stores is up 0.9 percent after up 3.1 percent in the prior month.
Sales at nonstore retailers which includes etailers is fairly steady at up 1.6 percent in February after up 1.8 percent in January. Nonstore retail sales account for 16.2 percent of total retail in February, up from 15.8 percent in January.
Market Consensus Before Announcement
February sales are expected to fall 0.3 percent versus January's outsized 3.0 percent surge which, in context, did follow 1.1 percent declines in both the key holiday months of November and December.
Definition
Retail sales measure the total receipts at stores that sell merchandise and related services to final consumers. Sales are by retail and food services stores. Data are collected from the Monthly Retail Trade Survey conducted by the U.S. Bureau of the Census. Essentially, retail sales cover the durables and nondurables portions of consumer spending. Consumer spending typically accounts for about two-thirds of GDP and is therefore a key element in economic growth. Of special attention is the control group; this is an input into the consumer spending component of GDP and excludes food services, autos, gasoline and building materials.
Description
Consumer spending accounts for more than two-thirds of the economy, so if you know how the consumer sector is faring, you'll have a pretty good handle on where the economy is headed. Needless to say, that's a big advantage for investors.
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 becomes excessive and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth. Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps auto sales are especially strong or apparel sales are showing exceptional weakness. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.
Balance was achieved through much of the nineties. For this reason alone, investors in the stock and bond markets enjoyed huge gains during the bull market of the 1990s. Retail sales growth did slow down in tandem with the equity market in 2000 and 2001, but then rebounded at a healthy pace between 2003 and 2005. By 2007, the credit crunch was well underway and starting to undermine growth in consumer spending. Later in 2008 and 2009, the rise in unemployment and loss of income during the recession also cut into retail sales. Spending rebounded in 2010 and 2011 but was constrained by lingering high unemployment.
Importance
Retail sales are a major indicator of consumer spending trends because they account for nearly one-half of total consumer spending and approximately one-third of aggregate economic activity. The control group for retail sales (which excludes restaurants, vehicles, gasoline and building materials) is an input into GDP and offers a narrower look at nondiscretionary spending.
Interpretation
Strong retail sales are bearish for the bond market, but favorable for the stock market, particularly retail stocks. Sluggish retail sales could lead to a bond market rally, but will probably be bearish for the stock market.
Retail sales are subject to substantial month-to-month variability. In order to provide a more accurate picture of the consumer spending trend, follow the three-month moving average of the monthly percent changes or the year-over-year percent change. Retail sales are also subject to substantial monthly revisions, which makes it more difficult to discern the underlying trend. This problem underscores the need to monitor the moving average rather than just the latest one month of data.
In an attempt to avoid the more extreme volatility, economists and financial market participants monitor retail sales less autos (actually less auto dealers which include trucks, too.) Motor vehicle sales are excluded not because they are irrelevant, but because they fluctuate more than overall retail sales. In recent years, many analysts consider the core series to be total less autos and less gasoline service station sales. The latter is volatile due to swings in oil and gasoline prices.
Price changes affect the real value of retail sales. Watch for changes in food and energy prices which could affect two large components among nondurable goods stores: food stores and gasoline service stations. Large declines in food or energy prices could lead to declines in store sales which are due to price, not volume. This would mean that real sales were stronger than nominal dollar sales.
Since economic performance depend on real, rather than nominal growth rates, compare the trend growth rate in retail sales to that in the CPI for commodities.
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 becomes excessive and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth. Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps auto sales are especially strong or apparel sales are showing exceptional weakness. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.
Balance was achieved through much of the nineties. For this reason alone, investors in the stock and bond markets enjoyed huge gains during the bull market of the 1990s. Retail sales growth did slow down in tandem with the equity market in 2000 and 2001, but then rebounded at a healthy pace between 2003 and 2005. By 2007, the credit crunch was well underway and starting to undermine growth in consumer spending. Later in 2008 and 2009, the rise in unemployment and loss of income during the recession also cut into retail sales. Spending rebounded in 2010 and 2011 but was constrained by lingering high unemployment.
Importance
Retail sales are a major indicator of consumer spending trends because they account for nearly one-half of total consumer spending and approximately one-third of aggregate economic activity. The control group for retail sales (which excludes restaurants, vehicles, gasoline and building materials) is an input into GDP and offers a narrower look at nondiscretionary spending.
Interpretation
Strong retail sales are bearish for the bond market, but favorable for the stock market, particularly retail stocks. Sluggish retail sales could lead to a bond market rally, but will probably be bearish for the stock market.
Retail sales are subject to substantial month-to-month variability. In order to provide a more accurate picture of the consumer spending trend, follow the three-month moving average of the monthly percent changes or the year-over-year percent change. Retail sales are also subject to substantial monthly revisions, which makes it more difficult to discern the underlying trend. This problem underscores the need to monitor the moving average rather than just the latest one month of data.
In an attempt to avoid the more extreme volatility, economists and financial market participants monitor retail sales less autos (actually less auto dealers which include trucks, too.) Motor vehicle sales are excluded not because they are irrelevant, but because they fluctuate more than overall retail sales. In recent years, many analysts consider the core series to be total less autos and less gasoline service station sales. The latter is volatile due to swings in oil and gasoline prices.
Price changes affect the real value of retail sales. Watch for changes in food and energy prices which could affect two large components among nondurable goods stores: food stores and gasoline service stations. Large declines in food or energy prices could lead to declines in store sales which are due to price, not volume. This would mean that real sales were stronger than nominal dollar sales.
Since economic performance depend on real, rather than nominal growth rates, compare the trend growth rate in retail sales to that in the CPI for commodities.
