A Stunning Miss for February Retail Sales

March 12, 2015

by Doug Short

The Advance Retail Sales Report released this morning shows that sales in February came in at -0.6% month-over-month, which comes on top of a -0.8% in January and a -0.9% decline in December. Core Retail Sales (ex Autos) came in at -0.1%, which follows a -1.1% in January and a -0.9% December decline. The general pundit view is that unseasonably cold weather was responsible for the weak numbers.

Today's numbers came in substantially below the Investing.com forecast of 0.3% for Headline Sales and 0.5% for Core Sales.

The two charts below are log-scale snapshots of retail sales since the early 1990s. Both include an inset to show the trend over the past 12 months. The one on the left illustrates the "Headline" number. On the right is the "Core" version, which excludes motor vehicles and parts (commonly referred to as "ex autos"). Click on either thumbnail for a larger version.

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The year-over-year percent change provides a better idea of trends. Here is the headline series.

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Here is the year-over-year version of Core Retail Sales.

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Retail Sales: "Control" Purchases

The next chart illustrates retail sales "Control" purchases, which is an even more "Core" view of retail sales. This series excludes Motor Vehicles & Parts, Gasoline, Building Materials as well as Food Services & Drinking Places. Note the highlighted values at the start of the two recessions since the inception of this series in the early 1990s.

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For a better sense of the reduced volatility of the "Control" series, here is a YoY overlay with the headline retail sales.

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Did Savings on Gasoline "Fuel" Non-Gas Spending?

Given the sharp decline in gasoline prices in recent months, we would expect February Retail Sales ex Gasoline to look strong, with savings on gas prices increasing other purchases. But February sales ex-gas were down -0.8% MoM.

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Real Retail Sales: A Preliminary Estimate

After the Consumer Price Index is released, we'll have a more detailed look at retail sales adjusted both for inflation and population growth.

Bottom Line: The Advance Retail Sales for February, both headline and core, were brutally below economists' expectations and a major source of concern for Q1 economic growth.

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