US Retail Sales In March Could Surprise To The Downside
March Retail Sales Forecast Slightly Bullish, Actual Data Could be Lower than Expected
The monthly retail sales report from the United States for March will be coming up today.
Data from the Census Bureau is forecast to show that core retail sales will rise 0.7% while headline retail sales will rise 0.9% during the month.
The forecast signals that retail sales will rebound after slumping in February. But underlying data indicates that some weakness still persists. This could no doubt affect the March retail sales report.
This will be one of the last data points this week as the US markets head into a long weekend bank holiday starting from Friday.
February Retail Sales Recap
The positive expectation comes after retail sales have been faring poorly over the past few months. In February, they fell unexpectedly. Headline retail sales fell 0.2%, while core retail sales fell 0.4% during the period. On a year over year basis, retail sales in February advanced 2.2% compared to the same period, a year ago.
The declines were due to households cutting back on purchases on items such as furniture, clothing, food and electronic appliances. There was a slight glimmer of hope as data for January saw an upward revision.
January’s retail sales were revised from 0.2% to 0.7%. The February retail sales report was weaker partly due to the delay in tax refund processing. This was because of the December/January partial government shutdown.
The processing of tax refunds is being reflected with households getting fewer and delayed tax refunds. This is ultimately leading to lower purchases.
Excluding automobiles, gasoline and food services, retail sales were down 0.2% in February. This follows a 1.7% increase just the month before. This measure of retail sales closely follows consumer spending patterns.
Consumer spending was also weaker in February. Data from the Commerce Department reports February consumer spending rising just 0.1% on the month. Overall, consumer spending was in a decline since December last year.
US Auto Sales Stay Weak– March 2019
Auto sales form one of the important contributors to the overall sales report. But for March, the news was disappointing.
Data on auto sales released a week ago saw that major automakers reported declining sales in March. The decline caps a weak trend in auto sales for the full first quarter of the year.
Major carmakers such as Fiat Chrysler, GM, and Toyota were all reporting lower deliveries for the period. This marks a second consecutive month of declines in auto sales.
The weaker pace of auto sales could potentially dent the outcome in the latest retail sales report.
Tax Return Uncertainty Could Still Be an Issue
The delay in the tax refunds continues to plague retail sales data. This remains a key point until the April 15th deadline for filing the tax returns in the US. By some estimates, the Internal Revenue Service has been processing just 40% of the tax refunds as of March 8th.
With another potential delay in the tax returns, this is likely to see the sentiment reflecting in lower retail sales. But after the decline in retail sales in February, we could see some better off data.
However, it would be surprising to see the March report beating the forecast of a 0.7% and 0.9% increase on the core and headline retail sales readings.
Consumer spending report for March will be coming out only towards the end of April, so it would be difficult to assess the level of impact this could have on the retail sales figures.
But considering the figures available so far, the retail sales report for March could be somewhat better than February’s disappointing figures. However, at the same time, it is unlikely that retail sales will rebound to beat the forecasts given for the month.