United States: Retail sales drop for second consecutive month in March
April 14, 2017
Retail sales declined for a second month running in March, yet another sign that the U.S. economy lost momentum in the first quarter of the year. Retail sales surprised to the downside and slipped 0.2% in March, weighed down by weakness in the automobile sector. Auto dealerships saw sales falling for a third straight month, while gas and service station spending declined on the heels of lower fuel prices. March retail sale numbers followed February’s revised 0.3% drop (previously reported: +0.1% month-on-month), itself the first and largest decline in nearly a year.
The report from the Department of Commerce showed that March’s sales were hurt by subdued demand for building materials, underpinned by a sharp deceleration in construction hiring as weather effects hit parts of the country. Sales of building materials and garden equipment declined 1.5% in March, a severe contrast to February’s 2.6% expansion. Gasoline stations declined 1.0%, while motor vehicle sales slipped 1.2%. On a better note, spending rose strongly in clothing and electronics stores, with sales up 1.0% and 2.6% respectively. Meanwhile, core retail sales—excluding auto sales, gasoline, building materials and food services—increased a tepid 0.1% in March, mirroring February’s reading.
On a year-on-year basis, growth in retail sales edged up from February’s revised 5.1% (previously reported: +5.7% yoy) to 5.2% in March. Compared to the same month last year, sales at department stores continued to decline in March (-4.5%), while sales at non-store retailers—a proxy for e-commerce sales—showed another month of double-digit growth (+11.9%). Non-store retailers continue to thrive as American consumers increasingly migrate away from physical stores to online outlets.
Author: David Ampudia, Economist