United States: Retail sales rebound in March
Retail sales expanded 0.6% in month-on-month terms in March, rebounding from February’s 0.1% fall and beating market expectations of a 0.4% expansion. Although consumer spending was soft throughout the beginning of 2018, March’s print could suggest strong labor dynamics, the outset of tax refund distribution and buoyant consumer sentiment are finally feeding through to higher household spending.
March’s pick-up was driven by strong growth in motor vehicle sales, which expanded 2.0% from the previous month, following four consecutive contractions. Sales of other big-ticket items also gained momentum in March, with furniture store sales growing 0.7%, and electronics and appliances sales up 0.5%, which reversed both sectors’ contractions in February. Health and personal care spending grew 1.4% in March, following a 1.1% contraction in February. Excluding autos and gas, retail sales expanded 0.3%, matching February’s reading but coming in below market expectations of a 0.5% rise.
Conversely, spending on sporting goods and hobbies dropped 1.8% in March, in contrast to a strong expansion in February. Clothing and accessories stores likewise reported lower sales, while building material sales also dipped in March. Department stores continued to struggle in March, contracting again following a big drop in February.
In annual terms, growth in retail sales jumped to 4.5% in March, from a revised 4.1% recorded in February (previously reported: +4.0% year-on-year). Annual average retail sales growth held firm at 4.4% in March.
March’s mild comeback rounds out a very weak quarter of retail sales, which will likely translate to a sizeable slowdown in private consumption in Q1. On a more positive note, tax refund disbursements throughout March and April should continue to support higher retail spending in April.