U.S. retail sales up 2.9% from a year ago in March report

U.S. retail sales were down 1% from February, but up 2.9% year over year, according to the U.S. Census Bureau. Sales slid more than the consensus estimate on a month-over-month basis, with growth below the rate of inflation which stood at 5% in March.

Consumers cut back on big ticket item purchases such as automobiles, furniture and electronics indicating a more cautious buyer, according to U.S. Department of Commerce economists. Credit and debit card spending per household tracked by Bank of America researchers also moderated in March to its slowest pace in more than two years, which was likely the result of smaller returns and expired benefits, coupled with slowing wage growth.

Stripping out non-core retail sales of automobile dealers, gasoline stations and restaurants, the National Retail Federation (NRF) reported March sales down 0.5% from February and up 4.6% from a year ago.

“March spending reversed the strong pace of core retail sales we saw earlier this year,” NRF Chief Economist Jack Kleinhenz said. “These results reflect both slower economic activity and lower prices because of easing inflation – which means fewer dollars spent even if consumers buy the same number of goods – but there is still a lot of spending in the economy. Keep in mind that households tend to shop less during the post-holiday season. In addition, tax refunds typically contribute to spending at this time of year but are smaller this year than last. Nonetheless, we are still looking at positive sales growth moving forward in 2023.”

A recent report from retail insights firm Circana indicates discretionary spending on general merchandise fell 7% in March from a year ago. Unit sales declined 8%, which was double the average monthly dips in January and February. The decline in unit sales is an indication that consumers are spending less, given the rise in prices from a year ago, according to the report. The steeper sales declines remained consistent during the last three weeks of March, spanning both units and dollars for the first time this year, according to Circana.

“Consumers are beginning to spend less on both discretionary and essential purchases with more consistency,” said Marshal Cohen, Circana chief retail industry advisor. “In order to create some spending elevation, there needs to be new products and new ways of thinking to reflect the changed consumer behavior and retail landscape.”

The NRF said continued easing of inflation and the overall strength of the job market and wages are keeping the fundamentals of the consumer economy strong and should support their ability to spend on household priorities through 2023.

“Retailers recognize the pressure on consumers from increased prices in services and experiences, and the impact of higher interest rates, and are prioritizing product mix, competitive pricing and convenience to help consumers stretch their budgets,” said NRF CEO Matt Shay.

Shay said core retail sales for the three months of the year are up 6% from a year ago. He reiterated that retail sales are projected to grow between 4% and 6% this year over 2022. NRF said March sales were up in five out of nine retail categories on a yearly basis. Following are reports – of unadjusted sales figures – on key sectors.
* Online and other non-store sales, up 12.4% year over year
• Health and personal care stores, up 7.3% year over year
• Grocery and beverage stores, up 5.6% year over year
• Sporting goods stores, up 3.3% year over year
• General merchandise stores, up 2.9% year over year
• Furniture and home furnishings stores, down 1.9% year over year
• Clothing and clothing accessory stores, down 2.2% year over year
• Building materials and garden supply stores, down 4.3% year over year
• Electronics and appliance stores, down 9.9% year over year