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United States Retail March 2024

United States: Retail sales growth ebbs in March but beats expectations

Retail sales grew 0.7% in month-on-month seasonally adjusted terms in March, which was a deterioration from February’s 1.0% increase but more than double market expectations. The slowdown was largely due to a deterioration in motor vehicle and parts dealers sales. In contrast, food and beverages, non-store retailers and gasoline stations sales gained momentum.

On an annual basis, retail sales grew 4.0% in March, which was significantly better than February’s 2.1% expansion. Accordingly, annual average retail sales growth rose to 2.6% in March (February: +2.5%). This signals an improving trend in the retail trade sector.

Strong retail sales for Q1 as a whole suggests still-elevated private consumption growth in the quarter, in line with our panelists’ projections. This could encourage the Federal Reserve to delay the start of interest rate cuts until Q3 at the earliest.

On the data, Desjardins’ Francis Généreux said:

“The strong retail sales figures for February and March suggest that real consumption was on the rise in Q1 2024, especially since goods prices have grown at a much weaker pace. While January’s data was not good, the situation has changed and household spending could contribute positively to real GDP growth.”

In a similar vein, Nomura analysts said:

“The momentum pickup late in the quarter is consistent with our view that a slowdown earlier in the year was just temporary, driven by payback from a strong holiday shopping season and delays to income tax refunds.”

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