First Quarter Retail Sales Appear Soft

Much like the economy, the pace of retail sales growth to close the first quarter out in March could be described as sluggish, based on data issued by the United States Department of Commerce and the National Retail Federation (NRF) this week.

Commerce reported that March retail sales at $446.9 billion were off 0.3 percent from February and up 1.7 percent annually. And total retail sales from January through March were up 2.8 percent compared to the same period last year.

The NRF reported that retail sales saw a 5.8 percent annual increase in March, and excluding automobiles, gasoline stations and restaurants, seasonally-adjusted retail sales in March were up 0.3 percent compared to February, which the NRF said was based on its calculations leveraging Commerce's data.

“Consumer spending remained healthy in March, despite weakness throughout the broader economy in the first quarter of 2016,” NRF Chief Economist Jack Kleinhenz said. “While colder temperatures in March lessened spending on apparel, recent job and income gains indicate positive prospects for future household spending.”

Last month, 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

A report from Stifel Fixed Income Chief Economist Lindsey Piegza noted that Commerce's 0.3 March decrease was significantly below the 0.1 percent rise expected, according to Bloomberg, and also marked the third consecutive month of zero or negative growth in retail spending. (February's 0.1 percent decline was revised up to 0.0 percent).

“[C]onsumer spending continues to lose momentum as Americans tighten their purse strings without the needed increase in income,” Piegza wrote. “Wages were on the rise at the end of last year, but have since retreated back down to the stagnant trend established in the aftermath of the Great Recession. With expectations for topline activity in Q1 previously downgraded after back-to-back months of negative retail spending at the start of the year, this morning's confirmation of a third consecutive month of absent consumer activity will no doubt prompt a further downward revision to first-quarter growth, potentially into negative territory.”

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