This article was originally written by Doug Short. From 2016-2022, it was improved upon and updated by Jill Mislinski. Starting in January 2023, AP Charts pages will be maintained by Jennifer Nash at Advisor Perspectives/VettaFi.
The Census Bureau's Advance Retail Sales Report for February was released this morning. Headline sales came in slightly below forecast at -0.4% month-over-month. Core sales (ex Autos) came in at -0.1% month-over-month, in line with the forecast.
Here is the introduction from today's report:
Advance estimates of U.S. retail and food services sales for February 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $697.9 billion, down 0.4 percent (±0.5 percent)* from the previous month, but up 5.4 percent (±0.7 percent) above February 2022. Total sales for the December 2022 through February 2023 period were up 6.4 percent (±0.4 percent) from the same period a year ago. The December 2022 to January 2023 percent change was revised from up 3.0 percent (±0.5 percent) to up 3.2 percent (±0.3 percent).
Retail trade sales were down 0.1 percent (±0.5 percent)* from January 2023, but up 4.0 percent (±0.7 percent) above last year. Food services and drinking places were up 15.3 percent (±2.6 percent) from February 2022, while general merchandise stores were up 10.5 percent (±0.2 percent) from last year.
The chart below is a log-scale snapshot of retail sales since the early 1990s. The two exponential regressions through the data help us to evaluate the long-term trend of this key economic indicator. The red line is a linear regression through the complete data series while the green line is a regression from the start of the series through the end of 2007 and then extrapolated to the present - thus excluding the Financial Crisis.
The year-over-year percent change provides another perspective on the historical trend. Current retail sales are up 5.4% compared to this time last year, the smallest 12 month increase since December 2020. Here is the headline series with a callout to the most recent 12 months.
Core sales
This morning's core retail sales (excluding automobiles) came in at -0.1% month-over-month, consistent with the Investing.com forecast. Core retail sales are up 6.8% compared to February 2022, the smallest yearly increase since December 2020. Here is the year-over-year chart of core retail sales with a callout to the most recent 12 months.
“Control” purchases
The next two charts illustrate retail sales “control” purchases, which is an even more “core” view of retail sales. This series excludes motor vehicles & parts, gasoline, building materials as well as food services & drinking places. The popular financial press typically ignores this series, but it's a more consistent and reliable reading of the economy. This morning's retail sales control purchases came in at 0.5% month-over-month, above the Investing.com forecast of -0.3%.
Similar to the retail sales snapshot chart earlier, the chart below is a log-scale snapshot of control purchases since the early 1990s and includes the two exponential regressions previously mentioned.
Here is the same series year-over-year. Current control purchases are up 7.1% compared to this time last year, its highest year-over-year growth in the last six months.
For a better sense of the reduced volatility of the “control” series, here is a YoY overlay with the headline retail sales.
Bottom Line: February headline and core were down from a very strong January, while control purchases were higher. Later this week, we'll take a closer look at Real Retail Sales.
Retail sales will impact interest in the SPDR S&P Retail ETF (XRT).
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