Retail sales rose the Econoday consensus of 0.1% in February, a weak reading.
However, January was revised from a solid 0.4% to a strong 0.6%.
Interestingly, auto sales fell in both January and February. Did consumers switch from buying autos to buying more junk?
A surprising point in this report is that these headline gains, though less than astonishing, were made despite weakness in the motor vehicle component which had been strong late last year and makes up about 1/5 of total retail spending. Auto sales fell 0.2 percent in February and 1.3 percent in January. Excluding autos, February retail sales rose 0.2 percent with January showing a standout 1.2 percent surge which is the strongest monthly gain in 5 years, since February 2012.
Gasoline pulled down February’s results, falling 0.6 percent after rising 2.1 percent in January. When excluding both autos and gasoline, sales rose 0.2 percent vs January’s very strong 1.1 percent. And control group sales, which are another core measure, inched only 0.1 percent in the month but follow an outstanding 0.8 percent gain in January, one that initially posted at 0.4 percent.
It’s the January revision that is most striking and which points to an upward revision for total consumer spending in the national accounts, one that came in at only 0.2 percent in the initial January report. Yet even the two months together, retail sales, though solid, are far from the astonishingly strong readings underway in consumer confidence, a mismatch that will play out in the months ahead. Another factor to note is that January and February are the two slowest months for retail sales, which makes for an outsized effect from seasonal adjustments.
Weather and Seasonal Adjustments
At least one economist thought sales would rise 0.9%. Amazing
Recall that December was cold and January was an exceptionally warm. I wrote about this in January (for December), and again in February (for January), accurately predicting the January plunge in factory output.
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