The Census Bureau reported that retail sales declined 0.4 percent in March, somewhat offsetting February’s 1.0 percent increase. One of the principal movers of the data in the last two months was sales at gasoline stations. The change in retail sales at gas stations in February and March was +5.4 percent and -2.2 percent, respectively.
These shifts can be explained by volatility in petroleum prices. Here are the average prices of West Texas Intermediate crude oil per barrel for the last four months: December, $88.66; January, $94.69; February, $95.32; and March, $93.05. As such, at least part of the decrease in retail sales could be explained by lower gasoline prices.
However, the rest of the release reflects broader weaknesses that go beyond petroleum prices. One of the faster sectors for growth recently has been auto dealer sales, which have risen 7.8 over the past 12 months. In March, though, motor vehicle and parts sales dropped 0.6 percent, falling back a little from the 1.3 percent rise in February. Likewise, we also saw declines in the following store types: electronics and appliances (down 1.6 percent), general merchandise (down 1.2 percent), sporting goods and hobbies (down 0.8 percent), health and personal care (down 0.3 percent), and food and beverage (down 0.1 percent).
There were some types of businesses that did experience sales increases in March. Examples include furniture and home furnishings stores (up 0.9 percent), miscellaneous store retailers (up 0.8 percent), restaurants and bars (up 0.7 percent), and non-store retailers (up 0.3 percent).
In summary, the retail sales numbers were disappointing overall for March. There are a number of factors that have been listed as possible reasons, including lower gasoline prices, higher payroll taxes, and cold weather. Moreover, to some extent, March’s weaker data might be a counterbalance to the surprisingly strong February report.
Regardless of the explanations, retail sales have risen 2.8 percent year-over-year. That represents a deceleration from the 4.4 percent rate observed the month before and the 5.4 percent rate seen six months ago (in September). This perhaps suggests that consumers have pulled back a little in their spending, which could be consistent with the payroll tax increase as well as reduced consumer confidence numbers.
Chad Moutray is chief economist, National Association of Manufacturers.
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