Coming off a better than expected month in February, retail sales were somewhat lackluster in March, according to data released today by the United States Department of Commerce and the National Retail Federation (NRF).
Commerce reported that March retail sales at $418.3 billion were down 0.4 percent compared to February and up 2.8 percent compared to March 2012. Total sales for the January through March period were up 3.7 percent annually.
The NRF reported that March retail sales, which exclude autos, gas stations, and restaurants, fell 0.2 percent on a seasonally-adjusted basis from February and were up 1.6 percent on an unadjusted basis annually. NRF officials said that these numbers portend cautious consumer spending, coupled with the aftereffect of the payroll tax hike from the Fiscal Cliff negotiations and colder weather.
“The fall off in spending is no surprise,” said NRF Chief Economist Jack Kleinhenz in a statement “A colder-than-usual winter, an anemic employment picture and delays in tax refunds impacted consumer spending across the board in March. While we remain optimistic that retail sales will grow modestly this year, it seems like the economy is off to a shaky start as we enter the second quarter. Improving housing prices and lower gas prices may help to offset the toll of increased taxes and sequester.”
As LM has reported, with retail sales growth modest at best, there still remains a mixed bag of signals and headwinds on the economic front, including a slightly declining unemployment rate, improving consumer confidence data, as well as encouraging automotive sales and housing data.
These things are occurring, though, against the backdrop of sluggish GDP growth and general uncertainty regarding the economy.
The continuing trend of slight or flattish sequential retail sales increases remains largely intact due to fairly even retail spending at a time when retailers remain cautious on the inventory planning side and postponing commitments until the until the economic outlook becomes clearer, while they are risking stock outages by having very lean inventories.
“The first quarter was not very kind to retailers,” wrote IHS Global Insight Director of Consumer Economics Chris G. Christopher, Jr. in a research note. “January was weak, February was a mixed bag with discretionary spending taking a hit and discretionary spending surging, and March was bad. There are some positives on the consumer front such as falling pump prices, a strong stock market, the housing market is gaining some traction, and overall inflation is very modest.”
