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Ecommerce sales jumped. General merchandise retailers, supermarkets, etc., booked solid gains. Lower prices cut gasoline & auto sales. But restaurants?
By Wolf Richter for WOLF STREET.
Retail sales for February rose only 0.2% seasonally adjusted, after the big drop in January. Year-over-year, they rose 3.1%, a smaller increase than in January (+3.9%). And they were confusing.
Sales at ecommerce retailers, general merchandise retailers (includes Walmart), food and beverage stores, and health & personal care stores all rose at a good clip month-to-month and year-over-year. This would indicate that there is not a general U-turn in consumer spending on goods.
Sales at gas stations fell because the price of gasoline fell month-to-month and year-over-year, not because people suddenly bought fewer gallons of gasoline. And sales at auto dealers fell amid lower new-vehicle prices, which reduced dollars-sales. But new-vehicle unit sales in February, seasonally adjusted, rose from January and were up year-over-year. So that’s not a sign of weakness either.
But sales at restaurants fell sharply, even though prices continued to increase at a good clip, and we’re going to keep our eyes on this one.
Ecommerce sales bounced after the drop in January. Sales at nonstore retailers (mostly ecommerce but also stalls and markets) jumped by 2.4% in February from January, seasonally adjusted, and were up 6.5% year-over-year, which indicates that consumers are not cutting back. Ecommerce is the second largest retailer category, after auto dealers.
Sales at general merchandise retailers rose by 0.5% month-to-month and by 4.6% year-over-year, seasonally adjusted, to a new record.
This is the fourth-largest category behind auto dealers, ecommerce, and restaurants. These retailers sell everything from patio furniture to food – Walmart is in this category. But department stores are tracked separately, and we exclude them from this measure.
That sales at these retailers didn’t even experience a slowdown in January and then grew further in February also indicates consumers are not necessarily cutting back.
Sales at food and beverage stores rose by 0.4% for the month and by 3.9% year-over-year, seasonally adjusted, about double the rate of food inflation.
Sales at health & personal care stores jumped by 1.7% in February from January and by 6.7% year-over-year.
Where sales were weak, amid falling prices of what they sell.
Sales at gas stations fell 1.0% month-to-month and were down a hair from a year ago. But they didn’t fall because people bought fewer gallons of gasoline; they fell because the price of gasoline fell.
Gasoline prices fell in February month-to-month and were down year-over-year [the CPI for gasoline is discussed in my series, Beneath the Skin of CPI Inflation], and gasoline retail sales, measured in dollars, track gasoline prices closely. The chart shows how sales at gas stations rise and fall with gasoline prices:
Sales at auto & parts dealers fell for the second month in a row, this time 0.4% month-to-month, seasonally adjusted, in dollar terms. But they were still up 3.1% year-over-year.
But new-vehicle unit sales rose 3.2% for the month and 2.1% year-over-year, seasonally adjusted.
This chart of the seasonally adjusted annual rate of unit sales, released by the BEA, shows the jump in sales late last year. February sales were at the top of the range for the years since the pandemic.
There has been no growth in new-vehicle unit sales in four decades, and we discussed this mess here with some ugly charts of annual unit sales by automaker. The only growth in dollar-sales is through higher prices and fancier models, but that has now stalled after the spike during the pandemic.
And then there is this kink.
Sales at food services and drinking places fell by 1.5% in February from January, which reduced the year-over-year gain to just 1.5%, seasonally adjusted. The past three months – December through February – have been weak.
This is something we’re going to keep our eyes on because the CPI for food away from home, which tracks inflation in restaurants and other eateries, has continued to rise at a substantial clip (+0.4% month-to-month and +3.7% year-over-year in February). Through November, sales in this sector had been growing strongly. But now there’s this decline. If this turns into a trend with another lousy reading in March, it’s something to be fretting over:
Which is why retail sales for February were so confusing. Some parts with a very broad selection or merchandise, including ecommerce and general merchandise stores, had strong sales growth. Other segments were weak due to lower prices in these segments – gasoline and autos – and that would be a sign not of consumer weakness but of lower prices. But restaurant sales were weak despite higher prices. And if that sticks, it would be a disconcerting kink that might indicate that our Drunken Sailors are sobering up.
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