Retail sales declined 3% in February as winter weather blanketed much of the nation. The month-over-month dip came on the heels of a robust 7.6% increase in January, according to a U.S. Census Bureau report.
Despite the dip from January, February sales were up 6.3% from the year-ago period and the Census Bureau said sales have grown year-over-year every month since June. The National Retail Federation (NRF) said Tuesday (March 16) it’s pleased with the traction sales are getting year-over-year as increased COVID-19 vaccinations, government stimulus and reduced restrictions on businesses continue to impact the pace of spending.
“February’s retail sales numbers are a minor speed bump on the road to post-pandemic recovery and are not a reflection of consumers’ willingness and ability to spend and drive the economy,” said NRF President and CEO Matthew Shay.
He attributed the decline to a number of factors including major snowstorms in the northeast and unprecedented ice storms in the south. He said this does not diminish the stimulus-related growth seen in January or what he expects to see as additional stimulus relief hits consumer bank accounts in the weeks ahead.
“Looking forward to the spring and with consumer confidence at its highest level since last March, we remain optimistic that retail will help facilitate a surge in spending, job growth and capital investment in the second half of the year as more Americans are vaccinated and local economies reopen nationwide, Shay added.
NRF’s calculation of retail sales – which excludes automobile dealers, gasoline stations and restaurants to focus on core retail – showed February was down 3.4% seasonally adjusted from January but up 7.1% unadjusted year-over-year. NRF’s numbers were up 8.9% unadjusted year-over-year on a three-month moving average.
“After January’s strong showing, we expected some payback in the form of lower figures in February by comparison,” NRF Chief Economist Jack Kleinhenz said. “Despite that, it’s hard to see this as a setback when you consider how large the year-over-year gains are and that sales are well above pre-pandemic levels. February had winter storms that impacted consumers’ ability to get out and shop, and the IRS’ delay in when it started accepting tax returns pushed back the release of refunds.”
Kleinhenz said increased vaccinations and reductions in restrictions allowed more people to venture out and government stimulus gave them more money to spend. Overall, he said February’s results confirm that consumers are willing to spend as the virus situation improves and continued government stimulus further strengthens the economic backdrop.
“With another round of stimulus checks being mailed right now, we expect another large boost in consumer spending over the next few months,” he added.
NRF has forecast retail sales will increase between 6.5% and 8.2% in 2021 with sales ranging from $4.33 trillion and $4.4 trillion. The trade group said retail sales have been resilient in the face of the pandemic rising 6.6% last year and beating the previous record set in 2004.
February retail sales fell in every category except groceries, which were unchanged, on a month-over-month basis (See category details at the end of this story.). But sales were up in two-thirds of categories on a year-over-year basis, which provides a better indicator of long-term trends and the state of the economy, Kleinhenz said.
Naveen Jaggi, president of Retail Advisory Services, predicts the results from February may be a precursor of an upcoming boom in sales. Between the winter storm which left many consumers homebound this February and the majority of previous stimulus checks already spent, he said it wasn’t surprising to see a decline.
“However, consumer habits are expected to take a positive turn as the spring season approaches. The vaccine rollout will continue to gain momentum and in turn push dining, entertainment, apparel and tourism. Additionally, the first batch of stimulus payments in the American Rescue plan were distributed on March 12th and as a result, we are expecting an increase in sales next month,”Jaggi said.
One sector poised for recovery is the food and bar industry. Jaggi said food services and drinking establishment sales were down 17% from this time last year, but he believes sales will rise.
“As cities begin to reopen indoor dining and lift more and more COVID-19 restrictions, we anticipate retail & food services will have a ‘Roaring Twenties’ effect in 2021 and retail sales will reap the benefits,” Jaggi predicted.
CATEGORY SALES (from U.S. Census Bureau)
• Online and other non-store sales were down 5.4% from January, up 23.5% year-over-year
• Building materials/garden supply sales were down 3% from January, up 11.4% year-over-year
• Sporting goods stores were down 7.5% month-over-month, up 11% year-over-year
• Grocery and beverage stores were unchanged month-over-month, up 7.2% year-over-year
• Furniture and home furnishings stores were down 3.8% from January, up 5.1% year-over-year
• Health and personal care stores were down 1.3% month-over-month, up 2.4% year-over-year
• General merchandise stores were down 5.4% month-over-month, but unchanged year-over-year
• Electronics and appliance stores were down 1.9% from January, down 6.7% year-over-year
• Clothing and accessory stores were down 2.8% from January, down 14.9% year-over-year