Global| Apr 16 2007U.S. Retail Sales Show Unexpected True Strength for March and in Q1
Summary
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, showed an increase of [...]
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, showed an increase of 0.7 percent from the previous month. It is also up 3.8 percent from March 2006. Total sales for the January through March 2007 period were up 3.2 percent from the same period a year ago. The January 2007 to February 2007 percent change was revised from 0.1 percent to 0.5 percent. As result, spending in the first quarter is looking more solid.
Bolstered by Easter shopping, retail trade sales alone were up 0.6 percent from February 2007 and were 3.6 percent above last year. Clothing and clothing accessories stores were up 8.0 percent from March 2006 and sales of general merchandise stores were up by a solid 5.8 percent from last year.
The table below tells the story…. Service station sales we up strongly based on the sharp rise in gasoline prices in the month (+3.1% and +13.9% SAARr over three months). The strength in the spring clothing sales are apparent in clothing and general merchandise selling strength in March. Of the main retail categories, only nonstore shopping (catalogue, mail order and internet) was negative.
Good weather may have helped to boost building materials spending but spending on furniture and electronics, another category that is solely linked to home sales (that have been weak), continued to stagger in the month.
In quarterly terms, retail sales are up at a nominal pace of 5.7%. Excluding motor vehicles and gasoline sales, the quarterly rise drops to a pace of 4.6%, but that is quite a respectable gain with oil taken out of the equation. Still, the core CPI is rising at a 3% pace over the first two months of the year. There is some considerable inflation gnawing away at these gains reducing the impact in real terms. But for total consumer spending we have to factor in services spending that has been pretty firm. Consumer spending probably made a real gain in Q1 of between 2% and 2.5% and could be closer to the top of that range.
Meanwhile some hopeful trends are in place. Building materials trend is showing some gains and overall sales trends have stabilized. The two weakest broad retail categories are medical care expenditures where the three month growth rate is down to 1.9% and nonstore retailers where the three month sales change is negative. Also, eating and drinking places expenditures is a discretionary type of spending where sales have contracted by 2.8% over the most recent three months.
We are left with a good monthly report and stabilized trends. However, the report remains a patchwork of mixed trends with sectors still in a state of flux. In the April report we will see how much the shift in Easter affected sales (despite seasonal adjustments that try to account for this shift).
| Mo/Mo | Seasonally Adjusted Annual Rate | ||||
| Retail Aggregates | 2007 Mar | 3-Mo | 6-Mo | Yr/Yr | Year Ago Y/Y |
| Retail & Food Service | 0.7% | 4.7% | 5.4% | 3.8% | 7.6% |
| Retail excl Motor Vehicles & Parts | 0.8% | 5.5% | 5.6% | 3.9% | 9.2% |
| Retail excl Motor Vehicles & Parts & Gas | 0.4% | 3.7% | 4.5% | 3.8% | 9.0% |
| Durables | 2007 Mar | 3-Mo | 6-Mo | Yr/Yr | Year Ago Y/Y |
| Totals | 0.5% | 2.2% | 3.7% | 1.2% | 6.6% |
| Building Materials | 1.4% | 6.3% | 3.0% | -4.4% | 17.8% |
| Motor Vehicles & Parts | 0.4% | 1.8% | 4.6% | 3.2% | 2.1% |
| Motor Vehicles Dealers | 0.3% | 1.6% | 5.0% | 3.4% | 1.8% |
| Furniture, electronics | -0.6% | -2.5% | 1.3% | 2.4% | 8.8% |
| Non durables | 2007 Mar | 3-Mo | 6-Mo | Yr/Yr | Year Ago Y/Y |
| Totals | 0.8% | 6.0% | 6.2% | 5.2% | 8.1% |
| Food & Beverages | 0.2% | 4.7% | 7.5% | 5.7% | 4.7% |
| Health | 0.1% | 1.9% | 4.8% | 5.1% | 8.4% |
| Gasoline | 3.1% | 19.9% | 14.1% | 5.2% | 10.7% |
| Clothing | 2.4% | 13.9% | 5.0% | 8.0% | 7.3% |
| Sport Goods | 1.1% | 8.9% | -0.6% | -1.0% | 6.8% |
| General Merchandise | 1.1% | 6.2% | 5.6% | 5.8% | 5.6% |
| Nonstore Retailers | -3.3% | 7.9% | 4.3% | 4.4% | 15.2% |
| Miscellaneous Retail | 0.6% | 1.9% | 4.8% | 5.1% | 8.4% |
| Non Durables excl Gas | 0.4% | 3.9% | 5.0% | 5.2% | 7.7% |
| Services | |||||
| Food Service & Drinking | 1.2% | -2.8% | 4.8% | 5.3% | 9.6% |
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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