US retail sales had been trending up since late 2015 but, beginning in late 2018, a series of weak or negative monthly results led to a drop-off in the annual growth rate which brought the annual rate below 2.0% by the end of that year. Growth rates then increased in trend terms through 2019 and into early 2020, until restrictions on American households began to take effect.
According to the latest “advance” sales numbers released by the US Census Bureau, total retail sales contracted by 8.7% in March, well under the -6.4% which had been expected and a dramatic fall from less than February’s revised figure of -0.4%. On an annual basis, the growth rate fell to -6.2% from February’s revised rate of 4.6%.
National Australia Bank senior markets strategist Gavin Friend said, “The only positive take-out was the control measure of retail sales that feeds into GDP increasing, as panic buying saw a 25% increase in food sales.”
The report came on the same day as March’s industrial production numbers were released and bond yields fell significantly at the long end. By the close of trade, the 2-year Treasury yield had added 2bps to 0.23%, the 10-year had lost 11bps to 0.64% and the 30-year yield finished 13bps lower at 1.27%.
In terms of US Fed policy, a rate change of any sort remained unlikely given the federal funds rate has been at the effective lower bound since the US Fed made two emergency cuts in March.