United States: Retail sales fall sharply in February as covid-19 contagion stifles shopping
March 17, 2020
Nominal retail sales fell 0.5% month-on-month in seasonally-adjusted terms in February, falling from January’s upwardly revised 0.6% rise (previously reported: +0.3% month-on-month). February’s decline was the worst retail sales result in over a year and disappointed market expectations of an 0.2% increase. Retail sales excluding cars, gasoline, building materials and food services—also known as core retail sales as they most closely reflect private consumption in the GDP readings—rose 0.1% in February following January’s flat print.
Falling retail sales were widespread in February as consumers avoid shopping centers amid the spreading coronavirus pandemic. Spending at electronics and appliance stores plunged, while sales of food services and drinking places also shrank notably. Moreover, purchases of motor vehicles and parts; furniture; clothing and accessories; and building materials and supplies all fell. Gasoline sales also plummeted amid depressed crude oil prices and tepid demand. On the upside, sales of non-store retailers, which includes online shopping, rose at a quick clip in February.
In annual terms, retail sales growth eased to 4.3% in February from 5.0% in January. Meanwhile, the annual average variation in retail sales rose to 3.9% in February from 3.7% in January.
Although certain retailers are likely to post strong sales in March as Americans rushed to stock up on supplies in anticipation for the coronavirus outbreak spreading in the U.S., many department stores, restaurants and bars have already shuttered. While the severity of the pandemic is still largely unknown, particularly for the U.S. where it has just begun to gain traction, it’s likely that consumer spending will be severely impaired in the rest of the first half of the year.
Author: Lindsey Ice, Economist