Prime Highlights:
Retail sales rose 0.2% in February, an improvement from the revised 1.2% decline in January but below the expected 0.6% increase.
Excluding autos, sales increased by 0.3%, meeting expectations.
Key Background:
Retail sales increased by 0.2% in February, slightly lower than anticipated, but still reflecting positive growth amid concerns over a potential economic slowdown. The advance reading from the Commerce Department on Monday revealed that while consumer spending improved compared to the downwardly revised 1.2% decline in January, it fell short of the 0.6% rise forecasted by economists. Excluding automobile sales, the increase was 0.3%, aligning with expectations.
The February data indicates that while consumer spending remained relatively restrained, it still outpaced inflation, with the Consumer Price Index (CPI) rising by 0.2% during the month. The “control group” measure, which excludes volatile sectors like food and energy and directly contributes to GDP calculations, posted a more robust 1% increase, surpassing expectations.
Despite the modest overall growth, the retail sales report pointed to a mixed economic picture. Online retail sales were a bright spot, showing a 2.4% increase, while health and personal care stores saw a 1.7% rise. Food and beverage outlets experienced a 0.4% increase. However, there were declines in sectors such as bars and restaurants, down by 1.5%, and gas stations, which saw a 1% drop due to falling fuel prices. Year-over-year, retail sales grew by 3.1%, surpassing the 2.8% inflation rate measured by the CPI. However, January’s sales figures were revised significantly downward, initially reported as a 0.9% decline.
The report coincides with ongoing concerns about the broader economic environment, including the impact of tariff policies on inflation and growth. Economic indicators, such as the New York Federal Reserve’s Empire State Manufacturing Survey, have also shown signs of weakening, further heightening concerns over the economy’s performance in the first quarter. Despite these challenges, the retail sales data suggests consumer spending remains resilient, supported by growing incomes and the continued shift toward online shopping.
