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Economy in Brief

U.S. Retail Sales Fell Unexpectedly, Discretionary Sales Mixed
by Tom Moeller March 13, 2008

During February, U.S. retail sales fell an unexpected 0.6%, below the Consensus forecast for a 0.2% gain. Weak retail sales were generally expected during the last two months. The weakness didn't come in the initial January report but it was clearly evident in February. The sales decline reversed January's 0.4% gain which was little revised.

Sales of motor vehicles & parts provided much of the surprise to the reports for last month and for January. They fell 1.9% in February, reversing an unexpected 0.2% January gain. Expectations for both months were based on unit sales reports of a 0.3% m/m increase in February and a 5.4% January decline.

Retail sales excluding autos last month fell 0.2% after a 0.5% January increase that was revised up slightly. A 0.5% December drop also was revised deeper. The February decline was short of Consensus expectations for a 0.2% rise.

A 1.0% decline in sales at gasoline service stations was in line with a 0.5% drop in retail gasoline prices last month. So far in March gasoline prices are up roughly 5.5% m/m. Less gasoline & autos, February retail sales fell 0.1% and the January result was revised up.

Sales of discretionary items were mixed last month. Apparel store sales rose 0.2% (2.3% y/y) after an upwardly revised 2.2% January increase. Furniture, home furnishings & appliance store sales, however, fell 0.4% (-2.1% y/y) and they are down 2.8% during the last three months. Sales of electronics & appliances fell 0.4% (+0.5% y/y). Sales at general merchandise stores rose 0.4% (3.6% y/y) after little change during January.

Sales of nonstore retailers (internet & catalogue) fell 0.1% (+1.8% y/y) during February, for the third consecutive monthly decline, and earlier months' figures were revised lower.

Sales of building materials & garden equipment continued their recent decline and fell 0.7% (-4.2% y/y). Since their peak early in 2006 these sales are down 8.3%.

Food & beverage store sales fell 0.2% (+4.3% y/y) last month. Restaurant & drinking place sales fell 0.4% (+4.6% y/y).

  February January Y/Y 2007 2006 2005
Retail Sales & Food Services -0.6% 0.4% 2.6% 4.0% 6.2% 6.6%
  Excluding Autos -0.2% 0.5% 4.4% 4.5% 7.4% 7.6%
    Less Gasoline -0.1% 0.2% 2.4% 4.3% 7.2% 6.6%
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