February retail sales show decent growth, according to Commerce and NRF data
March 13, 2012
Retail sales in February continued to show decent signs of momentum, according to data released today by the United States Department of Commerce and the National Retail Federation (NRF).
Commerce reported that February retail sales at $407.8 billion were up 1.1 percent from January and up 6.5 percent compared to February 2011. February also marked the biggest monthly increase in retail sales in the past five months, according to Commerce data. And total sales for the December through February period were up 6.4 percent from the same period a year ago. When excluding autos, February retail sales were up 0.9 percent over January.
The NRF reported that February retail sales, which exclude autos, gas stations, and restaurants, were up 0.5 percent on a seasonally-adjusted basis from January and up 8.6 percent on an unadjusted basis annually.
“Pent-up demand is turning desires into needs, which is one reason why consumers have begun opening up their wallets,” NRF Chief Economist Jack Kleinhenz said in a statement. “There is no doubt that the economy is on the upswing, certainly compared to six months ago. Stronger-than-expected February sales and an improving labor market paint a bright picture of the U.S. economy, although the impact rising gas prices will have on the economy’s momentum remains unclear.”
Credit Suisse economist Jonathan Basile said in a Bloomberg report that consumers are “unfazed by higher gas prices,” adding that “[t]his is a pleasant surprise on the overall picture for the economy.”
NRF officials noted that February’s retail sales gains represent 20 consecutive months of sustained annual retail sales growth, citing that some of the February increase can be attributed to warmer weather throughout much of the country in February compared to a year ago, when compared with weak sales in 2011.
As LM has reported, even though retail sales continue to show slow and incremental growth, continued growth is needed over a longer period, as consumer spending accounts for roughly 70 percent of U.S. economic activity. And while retail growth is relatively slow still, signals remain intact that the economy is showing signs of recovery, with consumer confidence on the upswing to a large degree and recent monthly gains in employment, too.
“What is driving these gains is a confidence issue and a lack of fear due to the lack of negative change in the most recent employment data,” said Ben Hackett, president of Hackett Associates. “The overall feeling from that is that it creates confidence, with consumers willing to draw down some of their savings and use it for expenditures. We are also seeing that in e-commerce sales, which can be harder to measure. In big retail stores, you are seeing an increase in sales, which can also be partially due to price increases, too. But you never know if it is pure volume or price or a mixture of the two. The strong [trade] flows suggest that there was an increase in volume as well as sales.”
And there also still signs of freight volumes showing decent gains, too, according to the American Trucking Associations most recent truck tonnage report and the Cass Freight Index. Intermodal and carload volumes have tailed off but not for retail-related reasons.
The trend of slight or flat sequential retail sales increases remains largely intact due to fairly even retail spending at a time when retailers remain cautious on the inventory planning side and postponing commitments until the until the economic outlook becomes clearer, while they are risking stock outages by having very lean inventories.
“The economy continues to show ‘signs of life’ after languishing over the last few years,” said Charles W. “Chuck” Clowdis, Managing Director, Transportation Advisory Services, at IHS Global Insight. “The fifth month high in February indicates that consumers are deciding to release pent-up demand and spend more. This bodes well for transport companies who deliver goods also. Now if gasoline and diesel prices return to more comfortable levels, consumers will feel better about spending on other goods and services.”
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