Clearer signs of spending letup from strong holiday

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Retail sales through February show clearer signs of a letup from a strong holiday. Most notably, sales show a pronounced letup from the strong November start to the holiday.

From year-to-year gains that peaked near 6% in November, growth has slowed to about 4% or less in February for retail sales excluding autos, fuel, and restaurants.

The letup likely will persist in the months ahead given the sideways movement of consumer confidence to spend over the next 90 days (see confidence post here).

Here is more on what the latest government-reported retail numbers say—as supported by the accompanying charts:

  • February signs. The letup is evident in February in terms of both seasonally adjusted (+4.0%) and nonseasonally adjusted (+3.8%) growth—which is a clearer sign of a letup compared with January’s mixed signals.
  • Holiday revised lower. Downward revisions mean that gains in the November-December holiday period were about 5.0% to 5.5%, which is weaker by about half a percentage point from the originally reported range for seasonally adjusted and unadjusted sales. See the prior post on holiday results.
  • Ecommerce vs in store. In-store retail sales have slowed to about 2.4% growth in February, based on ecommerce gains estimated at 14% to 16% growth. The in-store gains have slowed from a November peak of 4.0% to 4.5% growth—which had contributed to the best brick-and-mortar holiday since 2014.
  • Trends by store type. The apparel channels are the exception to the sales letup to start the year, improving for a second straight month from a weak December. The sales letup is focused in the food, drug, and mass retail stores—especially at the big-box mass retail stores since November. Homegoods stores—especially home improvement—have sustained above-average growth.
  • Annual trend. Despite the strong finish to 2017, retail performance for the year was lackluster outside of ecommerce sales. Overall retail sales (unadjusted excluding autos, fuel, and restaurants), grew 3.7% in 2017, which was the same as 2016. In-store sales slowed slightly to 2.1% annual growth. Ecommerce sales accelerated to 16.0% growth, which was the strongest annual growth since 2011.

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