Retail sales fell less than expected in February, by -0.1%.
Compared to the prior month, a big decline at gas stations (-4.4%) weighed down the headline sales print, an advance release from the Census Bureau showed.
And so excluding the volatile auto and gas categories, retail sales were positive, rising 0.3% and beating the forecast. But excluding autos alone, so-called core retail sales fell 0.1%.
The retail sales print for January was revised lower to -0.4% from -0.2%.
Sales at retailers of building materials recorded the biggest gain compared to the previous month and last February, reflecting that many Americans renovated their homes.
And compared to the prior year, sales were stronger at all but three of the 13 major kinds of businesses, signalling that consumer spending is comparatively sturdy.
The control group, which feeds into GDP and also excludes some volatile components, was flat.
Economists had estimated, according to Bloomberg, that retail sales fell 0.2%.
Core retail sales were expected at +0.2%, and the retail sales control group was estimated to have gained by the same.
Pantheon Macroeconomics’ Ian Shepherdson outlined in a client note before the release why the data cannot tell us everything we need to know about consumer spending, although they will give us a clue.
The initial release includes nominal numbers, and so they are still subject to revision on a “real” basis because of changes in the dollar.
More importantly, retail sales make up only 45% of consumption. The rest comes out in the full personal income and spending report at the end of the month.
We realise that asking markets to wait a couple weeks for the full spending data is like asking a five-year-old just to look at a bar of chocolate and not touch it, but it is the best way to avoid being blindsided. Unless the sales numbers are very strong or very weak, it is risky to assume that their overall tone will be reflected in real consumption.
And in a note after the release, Neil Dutta at Renaissance Macro wrote (emphasis added):
Recall that retail sales are reported in nominal terms; we suspect retail sales understates consumer spending in real terms. Looking ahead, there are two reasons to expect solid consumption growth. First, the labour market is near full employment pushing wage growth higher. Second, the recovery in wealth relative to income implies downside risk to the household saving rate.