– April 18, 2019

Retail sales and food services jumped 1.6 percent in March, following a 0.2 percent decline in February. Over the past year, they are up 3.6 percent. Core retail sales, which excludes motor vehicles and gasoline, rose 0.9 percent in March following a 0.7 percent decline in February. From a year ago, core retail sales are up 3.7 percent versus a five-year annualized growth rate of 4.1 percent (see chart).

Total and core retail sales have been erratic over the past four months, largely because of the government shutdown (see chart). However, the 12-month increase is moving back closer to the five-year growth rate. The gains are consistent with supportive consumer fundamentals including a tight labor market, accelerating hourly earnings growth, and favorable consumer confidence.

Gains in retail sales in March were widespread among the components. The only major component to show a decline for the month was sporting-goods, hobby, musical-instruments, and book stores, for which sales fell 0.3 percent for the month; the category is off 9.7 percent over the past year, likely reflecting competition from online (non-store) retailers.

Gasoline stations and motor vehicle and parts dealers were the top two gainers in March, rising 3.5 percent and 3.1 percent, respectively. However, gasoline sales tend to be driven by price changes (as opposed to sales volume) more than other categories, therefore large increases or decreases are less meaningful for gauging real economic activity. Average retail prices for gas increased 8.6 percent for the month.

Miscellaneous store retailers rose 1.8 percent while furniture and home furnishings were up 1.7 percent in March. Non-store retailers increased 1.2 percent and led all categories with an 11.6 percent rise over the past year. Non-store retailers account for about 12 percent of all retail sales and 20 percent of retail sales excluding motor vehicles, gasoline, and restaurants. Other strong yearly gains came from health and personal-care stores, up 4.4 percent, and restaurants, up 4.3 percent.

Weekly data on initial claims for unemployment insurance show the labor market remains very tight. Claims fell to 192,000, a drop of 5,000 from the prior week and the lowest level since 1969. The four-week average decreased to 201,250 from 207,250 in the prior week, also the lowest since 1969. As a share of payroll employment, claims continue to hover at all-time lows.

Today’s data suggest the patch of weakness in economic activity may be ending. However, data are still somewhat mixed, suggesting continued caution.

Robert Hughes


Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

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