Market Insight – Retail Sales

The last major economic data point of the week is nearly upon and what an eventful week it has been so far in terms of the release of weaker inflation data and jobs movement.

Retail sales are set to move in the needle for markets today as investors looks at top-tier data which could confirm of dispel their concerns about the US economy stalling.

Economists are pointing to a drop of 0.4% in headline retail sales, repeating last month’s decline. The ex-autos core measure is also predicted to fall, by 0.3%, after a slide of 0.1% in February.

Only the Retail Sales Control Group carries a more upbeat forecast for a rise of 0.6% after 0.5%. Last month saw a 0.3% fall and following an upwardly revised 3.2% surge in January which was the biggest gain since March of 2021.

The biggest decreases were seen in sales at furniture stores (-2.5%), food services and drinking places (-2.2%), miscellaneous retailers (-1.8%), motor vehicles and part dealers (-1.8%), clothing stores (-0.8%), gasoline stations (-0.6%).

In contrast, increases were seen in nonstore retailers (1.6%), health (0.9%), food and beverages stores (0.5%), general merchandise stores (0.5%) and electronics and appliances (0.3%).

Excluding autos, sales were down 0.1% and excluding gas and autos, sales were flat. On the other hand, the so-called core retail sales which exclude automobiles, gasoline, building materials and food services and relate more with the consumer spending component of GDP, increased 0.5%. Retail sales are not adjusted for inflation. 

Bank of America project a below-consensus fall of 1.0% in sales excluding autos and a fall of 0.5% in the Control Group. This should really rock markets if correct. Therefore, real expectations are lower, a positive surprise would be a much needed finish to the week to boost risk-on asset classes and turbo charge the weekly trends.