Don’t bring out the bunting and ticker-tape yet. Celebrating an economic spring in the US looks decidedly premature, judging by the latest Commerce Department …
Don’t bring out the bunting and ticker-tape yet. Celebrating an economic spring in the US looks decidedly premature, judging by the latest Commerce Department retail sales figures released Thursday.
Sales were unexpectedly down 0.6% in February compared to January, the third straight month of falls, as lingering winter weather kept consumers out of shopping malls and car showrooms and receipts fell in almost all retail categories. Analysts had forecast a 0.3% increase.
That makes the outlook for Q1growth fragile after robust growth in Q4 even though year-on-year sales rose 1.7%.
In spite of the harsh weather conditions and the effects of the now-settled labour dispute at the country’s West Coast ports consumer spending has slowed significantly.
Retail sales excluding automobiles, gasoline, building materials and food services were flat after a downwardly revised 0.1% dip in January.
Some big numbers skewed the figures – automobile sales tumbled 2.5%, the largest drop in a year, and receipts at building material and garden equipment stores fell 2.3%, the biggest decline since May 2012.
So where did that leave the fashion sector? Not in a great place to be honest. Sales at clothing stores were flat and there was a decline in furniture and electronic and appliances sales.
Any good news? Unsurprisingly, receipts at online stores rose, as did sales at sporting goods and hobby shops.
Core retail sales figures have been downbeat since December. February’s weak reading and January’s revision prompted analysts to cut their growth estimates for Q1 GDP.
But they’re still confident that economic activity will accelerate in Q2 as consumer spending gets a tailwind due to the massive savings from the lower gasoline prices in late 2014 and early this year, and from a labour market continuing to improve. It’s also hoped that a change in the weather that will remind shoppers that they really need to renew their warm weather wardrobes.
“Consumers may have throttled back spending, but they maintain the ability and means to spend,” said Jack Kleinhenz, chief economist at the National Retail Federation. “With the onset of warmer, spring-like temperatures and an earlier Easter, consumers will likely shake off the winter chills.”
Prospects for a pick-up in spending were also brightened by a report from the Fed showing household net worth posted its biggest rise in a year, up $1.52trn to $82.91trn in Q4.