Month/month core retail sales refer to the monthly change in the value of retail sales, excluding volatile automotive and gasoline sales components. It is an important economic indicator used to assess patterns of consumer spending and general economic activity.
The Retail Sales report measures the total revenue of retail establishments in various categories, such as clothing, electronics, furniture, and general merchandise. The core retail sales figure excludes car sales because they tend to be highly divergent and can distort the overall picture of consumer spending. Gasoline sales are also excluded due to their price volatility, which can fluctuate significantly and affect the overall value of retail sales.
The monthly figure for core retail sales is calculated by comparing retail sales for the current month (excluding cars and gasoline) with retail sales for the previous month and expressing the difference as a percentage.
A positive reading of core retail sales indicates an increase in consumer spending, which is generally positive for the economy. This suggests that consumers are confident and willing to spend on goods and services, which can drive economic growth. Conversely, a negative reading indicates lower consumer spending, which may indicate weaker economic conditions.
Policymakers, economists and analysts are closely watching the core retail sales figure because it provides insight into consumer behavior, which is the main driver of economic activity. Core retail sales figures that came in stronger than expected may indicate strong consumer demand and could have a positive impact on financial markets. On the other hand, weaker-than-expected figures may raise concerns about economic growth and could influence policy decisions by central banks and other policymakers.
It’s important to note that the core retail sales figure is just one element of the broader retail sales report, which includes all retail sales categories.
The role of the retail sales report in assessing the economy and consumer behavior
Economists and policymakers use the retail sales report as a key indicator to assess the health of an economy and understand consumer behavior. Here are some of the ways they use the report:
- Consumer spending: The Retail Sales report provides a measure of consumer spending, an important driver of economic growth. Economists analyze retail sales figures to gauge the strength of consumer demand and overall economic activity. Strong retail sales figures point to a strong economy, while weak numbers may indicate a slowdown.
- Economic growth: Retail sales are a critical component of GDP, which measures the total value of goods and services produced in an economy. By studying the retail sales report, economists can forecast and assess the potential impact on GDP growth. Higher retail sales figures are generally associated with increased economic growth.
- Consumer confidence: Consumer spending is influenced by consumer confidence, reflecting people’s optimism about their financial situation and the overall state of the economy.
Overall, the Retail Sales Report is a vital tool for economists and policymakers to monitor consumer spending, assess economic growth prospects, track inflationary pressures, and understand consumer sentiment.
Monthly Retail Sales Report Releases
The basic retail sales figure is usually issued on a monthly basis. The U.S. Census Bureau, specifically the Department of Commerce, publishes the retail sales report, including the core retail sales figure, usually around the middle of each month. The exact release date can vary but is usually scheduled about two weeks after the end of the reported month.
Note that the Retail Sales report covers a wider range of retail categories beyond just the basic retail sales figure. The report provides insight into consumer spending trends and is closely monitored by economists, analysts and policymakers to assess the health of the economy and consumer sentiment.
Analysis of the retail sales report in March in the United States
Retail sales rose 0.7% month-on-month in March to $709.6 billion, stronger than expected at +0.4%, modestly slowing from +0.9% (revised from +0.6%) in February. On a year-on-year basis, retail sales increased by 4.0%. Total sales for the first quarter of 2024 increased by 2.1% compared to the same period of the previous year.
Economist Mohamed El-Erian said the report represented “another blow to U.S. economic activity — consistent with the continued U.S. economic exception and currently resisting concerns about a gradual deterioration in household budgets.””.
The quarterly pattern, with March ending significantly, means we are entering the second quarter with a lot of baseline momentum.” That’s good for growth, but not too much for cutting interest rates.
Core retail sales: +1.1% vs. +0.5% forecast and +0.6% previously (revised from +0.3%). Excluding cars and gas: +1.0% vs. previously agreed +0.3% and +0.5% (revised from +0.3%), according to the U.S. Census Bureau.
Retail sales increased by 0.8% m/m in March and 3.6% from a year ago. Out-of-store retailers jumped 11.3% year-on-year, while food services and drinking venues advanced by 6.5%.%.
On an year-on-year basis, general merchandise stores saw a 5.7% increase, accelerating from a 1.1% pace in February. Sales at auto and parts dealers rose 2.8%, slightly higher than the 2.7% increase in February. Health and personal care sectors rose 2.3%, jumping from an increase of 1.8% in the previous month..
The sectors experiencing a decline in sales are furniture and home furnishings stores (-6.1%), sporting goods, hobbies, musical instruments and libraries (-3.9%) and petrol stations (-0.7).%).
