U.S. February retail sales decline modestly

NEW YORK, N.Y. — Nominal retail sales in February 2016 dropped by 0.1 percent, which was slightly less than the 0.2 percent drop that had been expected, a release from RBC Economics reported. The decline followed a 0.4 percent decline in January that was revised downward from a previously estimated increase of 0.2 percent.

The downward revisions in January were relatively broadly based and led by lower sales at motor vehicle and parts dealerships (-0.2 percent from 0.6 percent), and building material stores (-0.4 percent from 0.6 percent).

Nominal spending in February was weighed down by a price-related 4.4 percent drop in nominal sales receipts from gasoline stations. Sales of motor vehicles and parts also contributed to the decline, although the reported drop was a relatively marginal at 0.2 percent. Some offset was provided by sales at building material stores jumping by 1.6 percent, likely helped by the return to warmer than usual winter temperatures.

Control retail sales, which exclude sales at auto dealerships, gasoline stations, and building material stores, were unchanged in the month, which compared to expectations of a 0.2 percent increase. The increase in January was revised downward to 0.2 percent from a previously estimated 0.6 percent increase. The downward revision was led by lower sales at general merchandise stores (-0.5 percent from 0.8 percent), and health and personal care stores (-1.1 percent from 0 percent).

“Although the continued decline in nominal retail sales so far this year is disappointing, it is in large part the result of falling gasoline prices sending gas station receipts markedly lower in both February and January 2016. Control retail sales, which eliminate the effect of various volatile components including gas station sales, although unchanged in February, had increased in three of the prior four months,” said Paul Ferley, assistant chief economist for RBC Economics.

These earlier gains bode well for real first-quarter 2016 consumer spending rising by an annualized 3 percent, which would be up from the 2 percent gain recorded in the fourth quarter of 2015.

“We expect that indications of solid, and strengthening, domestic spending will result in the Fed resuming the tightening in monetary policy initiated in December 2015, with the fed funds range rising 25 basis points to 0.25 percent to 0.50 percent. We expect a similar-sized hike in each of the remaining quarters the year, with fed funds finishing 2016 at 1 percent to 1.25 percent,” said Ferley.

In a separate release this morning, the February 2016 producer price index (PPI) dropped by an expected 0.2 percent following a 0.1 percent increase in January. The decline was led by an intensification of weakness in wholesale gasoline prices, which dropped by 15.1 percent after an 8.8 percent decline in January. Food prices also moved lower and dropped 0.3 percent following a 1 percent increase in January. Trade services also reversed some of January’s strength, dropping by 0.4 percent in February after January’s 0.9 percent surge. On a year-over-year basis, overall PPI was unchanged in February relative to -0.2 percent in January. The annual increase in core prices rose to 1.2 percent in February from the January rate of 0.6 percent.

SOURCE: RBC Economics press release

Darian Armer

Darian Armer

Darian Armer was the assistant editor for RV Daily Report from 2015 to 2017. She lives in Billings, Montana, where she enjoys spending time with her husband, twins and three stepchildren. Introduced to the RV industry in 2012, she is happy to be writing for one of the greatest industries around.

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