US consumers spent less at auto dealers, gas stations and department stores in February, causing overall retail sales to slip 0.1 percent. For the year, retail sales without cars were up 4.4 percent (and auto sales were up 2.3 percent). The December 2017 to January 2018 percent change was revised from down 0.3 percent to down 0.1 percent.
"Month-to-month comparisons don't tell the whole story because of seasonal adjustment factors, but the three-month moving average and other year-over-year numbers are better indicators that reflect how sales are really increasing", said National Retail Federation Chief Economist Jack Kleinhenz. Excluding automobiles, gasoline, building materials and food services, retail sales edged up 0.1 percent last month after being unchanged in January. These so-called core retail sales correspond most closely with the consumer spending component of GDP.
The consumer spending, which accounts for more than two-thirds of the U.S. economic activity, seems to have slowed down at the beginning of the year after rising 3.8% year-over-year in the fourth quarter. Fed officials view the labour market as being near or a little beyond full employment. The economy created 313,000 jobs in February. He also noted that federal income tax filing season for 2017 had a relatively late start, so people may be spending any refunds later in the year. The poor retail sales readings have confounded several reports showing that consumer confidence is soaring and are likely to weigh on first quarter growth. The Atlanta Fed slashed its forecast to a 1.9 percent annualised rate from a 2.5 percent pace.
The Labor Department said Wednesday that the February increase in its producer price index was half January's 0.4 percent gain.
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Sales of non-food products declined 0.7% over the month, while those of food products showed no variations.
But there were some pockets of strength. Economists surveyed by The Wall Street Journal expected sales to rise 0.3%.
Building materials and garden supply stores were up 5.1 percent year-over-year and up 1.9 percent from January seasonally adjusted.
Non-store sales, including online pureplays, reached $55.1 billion, which is a 1 percent increase over January and 10.1% gain when compared the prior year period.