Retail Sales Figures

US retail sales for April: 💰 Total sales: +4.6% 🛍️ Core retail sales: +4.9% 📦 Non-store sales: +10.8% 🚘 Auto sales: +1.3% ⛽️ Gas station sales: +21.2% Another very robust month for retail, with overall sales up strongly. However, there are a few devils in the detail. First, the dramatic spike in gas prices has helped to push up spending. Excluding gas stations - where sales rose by a whopping 21.2% - overall retail sales growth was a still good, but more modest, 3.3% Second, inflation continues to flatter the numbers. On a volume basis, overall sales increased by 1.3% and core retail sales increased by 1.2%. These are actually good uplifts compared to recent volume growth, but they're nowhere near as impressive as the headlines. Third, some of the punchiness (in value and volume) was aided by higher tax refunds - which ran well ahead of last year. That's very helpful, but it is a temporary boost. Retailers should be pleased with the numbers and with the consumer resilience that underpins them. But there are still reasons to be cautious and ensure that retail discipline (in costs and execution) is exemplary.

October retail sales data is out from the US Census Retail Division and its mostly good news. Retail in October is up 4.6% versus last year (the second best month of the year). Core Retail (w/o Auto, Gas, Restaurant) is up 5.4% for October, and 3.5% YTD vs last year (historical average the 10 years prior to Covid was 3.6% YoY). Where it gets even more interesting is when you use October to forecast holiday. In the past five times that we had Thanksgiving this late in the year, October sales represented 30.1% of Q4. Which would imply 10.2% growth for Nov+Dec, and 4.7% for the year, which would be very solid growth. However, if we assume that October 2024 represents 31% of Q4 (as it did in 2022 and 2023) we get 5.5% growth for Nov+Dec and 3.8% growth for the year. Which is still better than many (including me) have feared. Of course, it's still true that there is clear winners and losers in the year. You'd rather be Amazon, Walmart, Temu, Shein, and TikTok Shops, than a Home Improvement, Department Store, Consumer Electronics Store, or a Furniture store.

Strong demand and a surge in gasoline prices pushed retail sales above estimates. That was an undeniably strong retail sales report by any measure. Overall retail sales rose 1.7% in March, following a revised 0.7% gain in February — the biggest monthly increase in a year. Twelve of thirteen categories rose, the most in months. Even as consumers had to spend more at the pump, spending on other items not only increased, but rose at a faster pace than expected. Excluding gas stations, sales still rose a firm 0.6%. Control-group sales — which feed directly into the GDP calculation — were up 0.7%, the strongest reading since August. There are two tailwinds that we think contributed to such a big upside surprise: 🔹Hiring was particularly strong in March following an unusually cold February, which should boost overall income and, in turn, spending. 🔹Larger tax refunds this year due to the new tax bill should have been a massive help for consumers, especially those living paycheck to paycheck. However, there are also reasons to stay alert that this spike in retail spending might be temporary: 🔻It is possible that, facing rising prices due to the war in Iran—which has pushed inflation expectations higher—consumers pulled forward their spending in March, no matter how high gasoline prices were. This shift in behavior has happened recently during the tariff saga, and we can't ignore it. 🔻Demand destruction, especially in goods like automobiles, often shows up with a lag. It could take two to three months to see the impact of the war, with the peak not occurring until at least a quarter later. Obviously, the positive news of a potential ceasefire or reopening of the Strait has helped lower energy prices significantly. However, they remain much higher than before the war. Because of these factors, while we think the economy can withstand this shock, we do not expect consumers to stay this strong for at least one quarter. Beyond that, if the impact of the war continues to fade, there will be more reasons to expect consumer spending to trend upward. For now, the new data on March's retail sales should add to GDP in the first quarter. Our current forecast of 2.2% quarterly growth looks much better now.

This morning’s U.S. retail sales report landed squarely in “never judge a book by its cover” territory. Headline sales for March rose +1.4%, surpassing both consensus expectations and February’s +0.22% figure, but a deeper dive into the data reveals some concerning details: (1) Sales growth was highly concentrated in motor vehicles and building supplies (see accompanying chart), two areas likely to be among the most heavily affected by new U.S. tariffs; (2) The retail sales “control group,” which excludes autos, building materials and gasoline, and is considered a more precise gauge of consumer spending for the purpose of GDP calculations, increased just +0.4%in March, failing to meet the +0.5% consensus. What do these devilish details mean for investors? We think March’s favorable headline retail sales print is more likely a result of consumers accelerating purchases to get ahead of U.S. tariff implementation than a true indication of a rebound in consumer spending. This view is supported by the dramatic decline in nonstore retail sales growth, which collapsed from +3.2% in February to a meager +0.1% in March. Additionally, we anticipate that “hard” data (quantifying actual economic activity, such as retail sales) will soon begin to show the negative impact of trending weakness in “soft” data (such as consumer sentiment surveys) — perhaps beginning with releases covering the month of April. This could translate into continued market volatility, as deteriorating consumer resilience poses a potentially serious headwind to the broader economy.

Ugly retail sales report puts the focus on the economics of necessity 📉 The December #retail sales report was ugly, with sales flat on the month versus expectations for a 0.4% gain, following a 0.6% advance in November. Holiday-season categories underperformed, pointing to consumer spending fragility beneath otherwise encouraging aggregate figures in Q4. While some affluent households continued to spend freely through the holidays, most consumers were far more judicious and relied increasingly on credit and savings drawdowns to sustain outlays. 🧮 Control retail sales – a key gauge of underlying #consumer demand that excludes volatile categories – fell 0.1% in December, following a downwardly revised 0.2% gain in November. 📊 Headline retail sales growth eased to 2.4% y/y – the slowest pace since September 2024 – while core retail sales growth slowed to 3.4%, the weakest since August 2024. After adjusting for prices, real retail sales fell 0.2%, underscoring that much of the nominal strength reflects price effects rather than volume growth. Inflation-adjusted core retail sales rose a paltry 0.8% y/y. 🎄 #Holiday sales increased 3.6%, with roughly half of the gain attributable to higher prices and volumes rising 1.8%—slightly stronger than our initial estimate of 2.5%. 🧠 Much of the recent focus has been on what is driving consumer spending resilience, but the latest data suggest consumer fundamentals are becoming increasingly strained. Many households are contending with depleted savings, fewer #job opportunities, and slower #income growth, all of which are gradually eroding purchasing power. 💼 This will be particularly true as wage growth eases further. On a year-over-year basis, the employment cost index (ECI) eased 0.1ppt to 3.4% in Q4 2025, while the private wages and salaries measure—an especially important gauge of underlying labor-cost pressure—fell 0.3ppt to 3.3%, the slowest pace since Q1 2021. We anticipate both measures easing further toward the 3.0% range in 2026. While wage and hiring restraint is helping firms contain costs and protect margins, it is also contributing to softer household income growth at a time when elevated prices continue to weigh on consumer spending. 📈 Still, in the near term, firm December activity raises the likelihood of another solid Q4 #GDP outcome, with growth tracking around 3.5% annualized. 🔮 Looking ahead to 2026, consumer momentum remains narrow and uneven, increasingly reliant on higher-income households, a greater willingness to borrow, and continued savings drawdowns. Revolving credit rose in December while savings fell, reinforcing that recent consumer spending strength is being financed rather than earned. While the One Big Beautiful Bill Act and larger #tax refunds should provide a modest fiscal tailwind in the first half of the year, households are also likely to rebuild savings and pay down credit card balances, limiting upside to consumption in Q1.

March Retail Sales: Cautiously Resilient Retail sales for goods increased 1.4% month/month in March compared to 0.4% growth previously. Auto sales were a main driver of this accelerated growth. When interpreting retail sales data, it’s essential to look deeper: ➡️ Retail sales mainly reflect goods consumption, a small part of overall consumption, as two-thirds of U.S. expenditures relate to services. ➡️ Retail sales aren’t adjusted for price changes, so higher growth could reflect faster price increases, even if volumes grew more slowly. Breaking down retail sales into subcomponents and aligning them with corresponding CPI components gives a clearer picture: 1️⃣ Real core goods spending (inflation-adjusted retail sales excl. gas stations) went up ever so slightly at 0.7% annualized 3-month basis, after declining in January and February (first chart 👇). 2️⃣ Real core goods spending, excluding motor vehicles, however, grew at a 2.9% 3-month AR pace, after recording 11.9% growth in February. On a monthly basis this inflation-corrected spending category has been expanding for December and February (+3.5%, +8% and +25.4% m/m AR resp. - see orange line in second chart 👇) but declined a notable -19.4% m/m AR in March. 3️⃣ Bar and restaurant spending growth was 1.7% 3-month AR in inflation-adjusted terms (purple line in first chart 👇), after declining in the preceding three months. Over the month, real bar/restaurant spending recovered significantly in March vs. February: +18.2% vs. -13.8% (see purple line in second chart 👇). The sharp rise in trade policy uncertainty since the elections incentivized households to pull forward durable goods spending to avoid future tariffs-induced durable goods price increases. Consequently, inflation-adjusted motor vehicles spending in particular has been volatile in both Q4 and Q1 on account of elevated trade policy uncertainty (third chart 👇). For Q1 consumption spending in the forthcoming Q1 GDP report, the relevant metrics are real core goods excl. motor vehicle dealer and maintenance spending as well as real bar/restaurant spending, and these suggest a slower but still solid pace for both. While underlying trends in the March CPI report suggest sticky, above-target inflation trends, real spending remained solid in March as households ramp up durable goods spending ahead of forthcoming tariff hikes. Combined with a still solid labor market this means the Fed will likely not have a lot of scope to cut rates in 2025, in contrast to, e.g., the ECB where underlying inflation trends are at the ECB's inflation target (final chart 👇) which could temper further dollar weakening in the near term. For more visit Macro Market Notes (including thoughts on last week's CPI report): https://lnkd.in/eUqaWm73 #retailsales #federalreserve #dollar

This morning's US retail sales data -- an overall growth of 0.2% (below the 0.4% consensus forecast) and a "control group" contraction of 0.1% -- are consistent with two actionable hypotheses: Greater consumer stress is expected as lower-income households, in particular, are facing significant headwinds. The AI economic lifeline (massive spending related to infrastructure and technology, as well as the productivity promise) emerges as a disproportionate driver of GDP growth. The combination of this retail sales data and other releases this morning (contracting ADP weekly job growth and well-behaved PPI) is driving US government yields lower (the 10-year is now trading at 4.01%). #economy #USretaill #FederalReserve #AI #inflation #markets