Washington—Retail sales rose again in March, marking the tenth consecutive month of increases; however, most of the increase could be attributed to higher gasoline prices, the U.S. Department of Commerce reported today.
Although total sales inched up by 0.4% to $389.3 billion, as food and gasoline prices rose, a 1.7% decline in automobile sales dragged down March’s figures. Removing gas sales from the total, March sales edged up only 0.1%, basically flat. The Commerce Department also revised February’s increase to 1.1%, 0.1% higher than previously estimated.
Excluding autos, gasoline and building materials, which are the figures used to calculate gross domestic product, sales rose 0.4% on February’s figure which was larger than expected.
Apparel and Accessories Sales Rise 0.6%
Ten of 13 major categories tracked showed gains last month, led by the biggest increase in furniture demand since 2004 and the largest advance in sales of electronics in a year. Apparel and accessories sales rose 0.6% in March up from the 1.8% increase in February over January.
Economist cited the recent decline in unemployment in March and the cut in this year’s payroll tax as helping to keep consumer goods selling. The Commerce Department’s totals come on the heels of last week’s sales reports that showed March sales increased 1.7% better than the 0.7% decline that retail analysts had been predicted. Retail sales were projected lower in March due to a later Easter.
“The consumer was more resilient in March than some of our concerns,” said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston. “Improving labor-market conditions are helping support consumption. This is a very impressive pace of spending, with gains across a diverse range of products.
A Decline In Consumer Confidence?
But some sectors, especially in the mass market, are finding its consumers feeling a fuel pinch.
“We still see our customer financially strapped,” Rosalind Brewer, president of Walmart’s East division, said in an investor presentation on April 12. “We see the shopper’s wallet being stretched a lot more.”
Federal Reserve officials noted in minutes of their March 15 meeting that “while participants expected that household spending would continue to expand, the pace of expansion was uncertain.”
There are two potential explanations for slowing sales results, said Daniel Indiviglio of The Atlantic. “Rising prices may have forced Americans to devote more of their money to gasoline and food in March, leaving little left over for additional retail spending. Alternatively, consumer sentiment’s decline, caused in large part by rising food and gas prices, has led to Americans curbing their spending. Either way, it looks like the recovery will slow this spring.”
The Consumer Confidence Index plummeted in March, falling 8.6 points to 63.4, matching December’s index level. While the level still beat economists’ predictions for a worse reading of 62.3, “still, it’s the biggest drop since February 2010, which isn’t a good sign for the economic recovery, reported Indiviglio.