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Economy in Brief

U.S. Retail Sales Firm; "Core" Sales Rise To Highest Since 2008
by Tom Moeller March 12, 2010

The gain in February sales, while small, was impressive. Retail sales rose 0.3% after a 0.1% January uptick that was revised down from the 0.5% increase reported last month. A 0.2% decline had been expected for February sales. On a three-month basis, sales rose at a 1.2% rate. Beyond the total, however, the numbers look better. Nonauto sales rose 0.8% after a 0.5% January increase that was little-revised. On a three-month basis nonauto sales rose at a respectable 4.8% annual rate, though that was less than half the peak rate of growth last November. These numbers were, of course, influenced by recently weak gains in gasoline prices. Nonauto retail sales less gasoline, a better measure of "core" spending, continued to improve last month at a 4.6% annual rate which was just off its November high of 7.2%. The growth returned the level of sales to its highest since August 2008.

"Core" discretionary spending improved as furniture, home furnishings & electronics sales rose 2.2% and at a 9.8% annual rate over the last three months. That's improved from the 9.6% decline during all of last year and raised sales to the highest level in twelve months. Though furniture sales alone rose just 0.7% (-2.1% y/y), sales of electronics & appliances surged 3.7% (-1.6% y/y) after a 2.2% January increase. General merchandise store sales followed with a 1.0% gain (3.2% y/y) after a 1.3% January jump. Finally, apparel store sales gained 0.6% (-0.7% y/y) on the heels of a 1.5% January increase.

Motor vehicle sales have been the drag on recent spending. A 2.0% (+2.1% y/y) February slip was the third consecutive monthly decline which mirrored lackluster unit sales. Finally, growth in sales at gasoline service stations also has eased after last spring's surge with higher prices. February sales rose just 0.3% (24.0% y/y) and at a 6.3% rate during the last three months.

Earlier strength in internet & catalogue sales eased last month. Sales were unchanged but were still 11.8% higher than last year. The three-month rate of gain also eased off to 17.6%.

  February January December Y/Y 2009 2008 2007
Total Retail Sales & Food Services (%) 0.3 0.1 -0.2 3.9 -6.0 -0.8 3.3
  Excluding Autos 0.8 0.5 -0.1 4.2 -4.8 2.4 3.9
    Non-Auto Less Gasoline 0.9 0.5 -0.2 2.0 -1.9 1.6 3.6
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