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Economy in Brief

U.S. Retail Sales Off, But ... 
by Tom Moeller March 14, 2006

US retail sales fell 1.3% last month but several factors suggest the decline hardly indicates consumer spending weakness, even though it exceeded Consensus expectations for a 0.8% drop. 1) January's warm weather surge in spending was revised higher to 2.9%. 2) Retail sales during January and February were 2.8% above 4Q05. 3) The 0.4% decline in nonauto sales was less than Consensus expectations for a 0.5% drop.

Lower nonauto retail sales followed a January surge revised up to 2.6% and the two month strength in sales left the 1Q average so far 2.3% above 4Q which rose 1.9% from 3Q.

Motor vehicle & parts dealers sales fell 4.6% (-0.9% y/y) after an upwardly revised 4.2% January spurt. The decline was in line with the 5.8% m/m drop in unit auto sales during February.

Lower apparel store sales reflected the brunt of the warm-weather give back from January strength. A 3.3% (+1.6% y/y) drop followed the downwardly revised 2.4% gain. Elsewhere, discretionary spending looked respectable. General merchandise store sales slipped just 0.3% (5.3% y/y) after a little revised 1.8% January rise. Sales of furniture, electronics & appliances fell 3.1% (+5.6% y/y) after a 5.6% January spurt that was much stronger than the 2.9% gain reported initially.

Building material sales rose another 1.5% (20.5% y/y) after a 7.3% jump in January that was double the rise initially estimated.

Sales at gasoline stations fell 1.6% (+17.7% y/y) as retail gasoline prices fell 1.5%. In March, gasoline prices at $2.35 per gallon are 3.0% higher than during February.

Less gasoline, nonauto retail sales fell 0.3% (+7.8% y/y) last month following a 2.4% January spike that revised up from 1.8% reported initially.

Sales of nonstore retailers (internet & catalogue) surged 3.2% (13.3% y/y) after a little revised 2.7% January decline.

  Feb Jan Y/Y 2005 2004 2003
Retail Sales & Food Services -1.3% 2.9% 6.7% 7.5% 7.3% 4.3%
  Excluding Autos -0.4% 2.6% 8.9% 8.6% 8.2% 4.7%
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