Retail sales account for a large part of consumer spending, which itself is typically the largest segment of GDP in an advanced economy. Changes in retail sales have a large effect on GDP growth rates and thus they are of great interest to economists, policy makers and financial markets.
U.S. retail sales have been weak for the past three months but the latest figures for March may mark a departure from this trend. According to the latest “advance” sales numbers released by the U.S. Census Bureau, retail sales grew by 0.6% over the month and by 4.5% when compared with the same period last year. The figures were greater than the +0.3% median expectation and higher than February’s comparable figures of -0.1% and 4.1%.
U.S. financial markets reacted in a mixed fashion and bond yields went higher while the USD was weaker against other major currencies. By the end of the day, 2 year yields were 4bps higher at 2.38%, 10 year yields edged up 1bp to 2.83% but 30 year yields remained unchanged at 3.03%.