Retail Sales Inch Higher

The growth in U.S. retail sales in February was weaker than expected given all the signs for upside strength

February retail sales rose 0.3% and the ex-auto aggregate increased 0.2%. January data was revised to show a 0.3% January decline from a 0.2% decline previously, while ex-auto sales were left at 1.2%. Overall, the February data were more subdued than expected given all the signs for upside strength on the month.

Motor vehicles and parts rose only 0.4%, despite unit auto sales jumping nearly 6%. Gasoline service station sales were flat despite indications that the further rise in prices on the month would boost the aggregate. And most of the remaining components revealed a pullback from the strong levels seen in January despite the strength in weekly and monthly chain store sales, along with the potential for tax refund payments, reduced tax liabilities, and declining rates for tax withholdings to keep these components at inflated levels.

Overall, while the data still support a solid level of real consumption for the first quarter following the hefty 6% gain in the fourth quarter, today's subdued figures do take some of the upside out of the quarter. S&P MMS currently expects first quarter real consumption at 2.8%, although the cross-currents of recovery mixed in with an abnormally-warm winter, tax/refinancing stimulus, and swings in energy leave a heightened degree of uncertainty with the March forecast.

From Standard & Poor's Global Markets

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