Mixed Retail Growth Reflects Market Weakness

While retail sales numbers issued for the month of February by the United States Department of Commerce and National Retail Federation were technically mixed, they each shared a common theme of little or negative growth.

Commerce reported that February retail sales were down 0.1 percent compared to January (following a 0.4 percent January decline) and up 3.7 percent annually at $447.3 billion. Total retail sales from December 2015 through February 2016 were up 2.9 percent.

The NRF reported that February retail sales, which exclude automobiles, gas stations, and restaurants, headed up 0.1 percent over January (matching January's' increase over December) and 3.8 percent on a seasonally-adjusted basis compared to February 2015. On an unadjusted basis, NRF said February was up 6.7 percent annually. But it explained that it typically reports annual monthly retail sales data on an unadjusted basis but did it on a seasonally-adjusted basis in February due to the extra day in the month due to leap year along with the severe weather in February 2015 that hindered sales activity.

“While spending moderately, consumers are navigating through the heavy fog of market turbulence experienced earlier this year,” NRF Chief Economist Jack Kleinhenz said in a blog posting. “Looking at the bottom line, consumer spending is on track to rise, which is good news for the economy.”

IHS Global Insight Director of Consumer Economics Chris Christopher was not nearly as bullish as Kleinhenz, saying in a research note that February retail sales were weak with very few gainers.

“Originally, we thought consumers came out like gangbusters in January; however, the downward revisions to January make it evident that consumers have been cautious the past three months,” he wrote. “We expect retail sales, consumer spending, and consumer confidence to pick up in March, since stock market volatility has been relatively subdued.”

In February, NRF said it is calling for 2016 retail industry sales, excluding automobiles, gas stations, and restaurants, to see a 3.1 percent annual increase.

While this estimate comes in higher than the 10-year average of 2.7 percent, it falls short of the NRF's 2015 estimate of 4.1 percent. The Washington, D.C.-based organization also said it expects non-store sales to grow between 6-9 percent in 2016.

The NRF offered up some other metrics that it maintains point to a strong 2016 on the retail sales front, including:
-2016 economic growth to be in the 1.9 percent-to-2.4 percent range; and
-an estimated 190,000 new jobs added per month, which is off from 2015 but consistent with a growing labor market

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