Retail Sales Showed Fall in February

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • February retail sales FELL 0.2 percent or $1.01 billion after rising an upwardly revised $3.7 billion or 0.7 percent in January;
  • The February decline is consistent with the drop in home sales as sales at furniture, appliance and building material outlets were a combined $1.95 billion;
  • Gasoline station sales ROSE 1.0 percent as the price of gasoline increased 2.7 percent, according to the Energy Information Administration;
  • Sales at non-store retailers (online) ROSE 0.9 percent down from the 4.5 percent increase in January; sales at non-store retailers remained at 11.0 percent of total sales;
  • The increase in retail activity came in the same month in which the Consumer Price Index ROSE 0.2 percent month-month;
  • Retail activity was up 2.2 percent year-year while CPI rose 1.5 percent.

Trends:

  • After falling sharply in November and December (a combined $355 million), sales at restaurants improved for the second straight month. The January-February increases totaled $71 million;
  • BLS reported the number of retail jobs FELL 6,100 in February, a decrease of 0.4 percent from January;
  • The number of retail jobs at appliance, personal care and general merchandise stores dropped in February according to the BLS;

Data source: Census Bureau

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Continuing to track moribund home sales, retail activity – as measured by prices – dropped for the third time in four months in February, dragging retail employment down with it.

Even though existing home sales rebounded in February with a month-month-month 11.8 percent increase – the strongest month-month jump on over three years – sales (closings) remained down year-year for the 12th straight month. And, the strong February sales nearly wiped out inventories. The months’ supply of homes for sale fell to 3.5, the lowest since last March.

And, the Pending Home Sales Index fell again in February, the fourth decline in the last five months and the ninth month-month decline since the December 2017 tax law changes which capped the tax advantages of home ownership. The impact on retail sales of the tax law changes accelerated in recent months, with sales down in five of the last seven months.

The most obvious is the impact slower home sales is having on furniture and appliance stores where sales have dropped for five straight months and in eight of the 14 months since the tax changes kicked in. Appliance stores have seen a similar drop-off, falling in five of the last six months and down 3.2 percent in the last year.

That retail activity increased more rapidly than Consumer Price Index prices reflects the improvement in earnings as reported by the Bureau of Labor Statistics in its Employment Situation release.

Hear Mark Lieberman every Friday on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124, at 6:20 am Eastern Time. You can follow him on Twitter at @foxeconomics.  

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