U.S. retail sales declined in February despite solid fundamentals, including rising incomes and a historically low unemployment rate that were expected to propel spending during the month. According to a report published by the U.S. Department of Commerce at 8:30 a.m. ET on Monday, headline sales dropped 0.2% in February versus expectations for a gain of 0.2%.
Core sales slipped by 0.4%, while the so-called Control Group edged down by 0.2%. Control Group strips out items such as building materials and petrol that are considered volatile.
The government also upwardly revised January’s upbeat data to show to show retail sales rising 0.7% instead of increasing 0.2% as previously reported. Core sales and the Control Group for the month were revised to show gains of 1.4% and 1.7%, respectively.
Drops in groceries, building materials, clothing, furniture, and electronics sales led February’s decline. Grocers and electronics retailers saw sales plunge 1%, while building materials stores posted a decline of 4.4% in February.
Still, non-store retailers, posted a gain of 0.9% in February and 10% in the past year. Auto sales also jumped slightly in the second month of the year after dropping sharply in January. In December, retail sales declined 1.6% – the most since 2009.
Retail sales have kept pace with the rate of inflation over the past year by increasing a slight 2.2%. February retail sales report signals that more Americans are spending less money as stimulus from the 2017 tax cuts wanes, and global economic slowdown fears continue to mount.
The report is likely to add to U.S. monetary policymakers’ determination to keep borrowing rates unchanged for now. Other soft data such as manufacturing production and housing starts have also prompted worries among economists.
The Commerce Department delayed February retail sales report due to the 35-day partial federal government shutdown that ended on January 25. Retail sales figures for the month of March are expected to be released on April 18.