February 2024 US retail sales rose by 0.2%, missing the forecast of 0.6%. The previous month’s data was revised from -0.9% to -1.2%.
Retail sales excluding automobiles increased by 0.3%, meeting expectations, but revisions showed a decline from -0.4% to -0.6%. The control group’s sales grew by 1.0%, exceeding the anticipated 0.3%, while previous figures were revised down from -0.8% to -1.0%. Excluding gas and autos, retail sales rose by 0.5%, an improvement from a prior revision of -0.5%.
Sector Performance And Consumer Behavior
Food services and drinking places faced a month-over-month decline of 1.5%. This may indicate shifting consumer behaviour due to adverse weather or declining sentiment.
Sales changes varied across sectors, with health and personal care stores growing by 1.7%. Other notable changes included a 2.4% rise in non-store retail, declines of 0.4% in motor vehicle dealers, and reductions of 1.0% in gasoline stations.
Concerns about overall consumer spending have emerged, marked by a significant 8.5% drop in restaurant sales at an annual rate over the last three months. Analysts suggested caution in discretionary spending habits among consumers, influenced by ongoing online shopping trends.
While the US consumer market shows some stability, future insights from Fed Chair Jerome Powell could provide clarity on evolving spending trends.
Impact On Economic Expectations
The latest US retail sales report presents a mixed picture. February’s headline growth of 0.2% fell short of expectations, but underlying details merit closer examination. The prior revision from -0.9% to -1.2% in January amplifies concerns about earlier weakness, reinforcing that economic momentum at the start of the year was softer than previously thought. While February did see some improvement, it was not as robust as markets had anticipated. The discrepancy between forecast and actual figures will likely influence expectations surrounding economic resilience in the months ahead.
Stripping out automobiles, sales increased by 0.3%, which aligned with forecasts. However, revisions showed the previous reading was weaker than first reported, shifting from -0.4% to -0.6%. This downward adjustment tempers any optimism about February’s gains, suggesting that core retail figures were not as firm as they initially appeared. A key segment—the control group—surpassed projections with a 1.0% increase, yet here too, prior revisions pointed to a lower starting point than previously recognised. Taken together, these adjustments highlight a retail sector that is not necessarily weakening across the board but is displaying less underlying strength than earlier data had implied.
Certain categories demonstrated resilience. Sales excluding gas and autos climbed by 0.5%, a welcome contrast to the previous -0.5% revision. Health and personal care stores saw a 1.7% uptick, indicating steady demand in that space. Non-store retail, primarily consisting of online commerce, gained 2.4%, reinforcing the broader shift towards digital purchasing habits. However, there were areas of strain. Motor vehicle dealers recorded a 0.4% decline, while petrol station sales dipped by 1.0%, potentially reflecting easing fuel prices or reduced travel. Restaurants and bars experienced a sharp 1.5% monthly contraction, pushing their three-month annualised decline to 8.5%.
That last figure is particularly relevant. Eating and drinking establishments are often a useful gauge of discretionary spending, and lingering softness in that category might signal consumer caution. Some of this decline could be attributed to adverse weather conditions disrupting activity, but broader patterns also need consideration. Analysts have warned about shifts in household priorities, with higher living costs shaping purchasing decisions. Online shopping’s continued strength demonstrates that consumers are still spending, but with greater selectivity.
With Powell expected to speak soon, his comments could provide further indication of how policymakers are viewing spending behaviour. Markets will be watching closely for any reference to consumer resilience, inflation persistence, or potential shifts in monetary policy outlook. Adjustments in expectations could feed directly into pricing models, influencing how positions are structured in the coming days.
