Summary: US retail sales drop in February; fall significantly larger than expected figure; credit card, debit card trackers suggest spending lift in early March, ahead of stimulus payments; falls in all retail categories bar one; “vehicles and parts”, “non-store retailers” the largest influences on total.
US retail sales had been trending up since late 2015 but, commencing in late 2018, a series of weak or negative monthly results led to a drop-off in the annual growth rate below 2.0% by the end of that year. Growth rates then increased in trend terms through 2019 and into early 2020 until pandemic restrictions sent it into negative territory. A “v-shaped” recovery then took place but more recent growth rates have been somewhat volatile.
According to the latest “advance” sales numbers released by the US Census Bureau, total retail sales dropped by 3.0% in February. The fall was significantly lower than the 0.3% decline which had been generally expected and in stark contrast to January’s 7.6% increase after it was revised up from 5.3%. On an annual basis, the growth rate increased from January’s revised figure of 9.5% to 6.3%.
The report was released on the same day as February’s industrial production numbers and, despite the soft figures, longer-term US Treasury bond yields moved a little higher. By the end of the day, the 10-year Treasury yield had inched up 1bps to 1.62% and the 30-year yield had added 2bps to 2.38%. The 2-year yield remained unchanged at 0.15%.
NAB senior economist David de Garis said, “As for next month, JPMorgan and BofA’s respective trackers of credit-and-debit-card transactions shows a lift in spending in early March even ahead of the stimulus payments.”
All categories bar one recorded lower sales over the month. The “Motor vehicle & parts dealers” and “Non-store retailers” segments provided the largest influences on the overall result. Sales in these segments decreased by 4.2% and 5.4% respectively over the month. However, both segments’ sales increased by 9.2% and 25.9% respectively on an annual basis.