The Census Bureau’s Advance Retail Sales Report for March revealed a 0.7% rise in headline sales from February, marking the second straight month of increased consumer spending. The latest increase was higher than the anticipated 0.4% monthly growth.
For an inflation-adjusted perspective on retail sales, take a look at our Real Retail Sales.
Here is the introduction from today’s report:
Advance estimates of U.S. retail and food services sales for March 2024, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $709.6 billion, up 0.7 percent (±0.5 percent) from the previous month, and up 4.0 percent (±0.5 percent) above March 2023. Total sales for the January 2024 through March 2024 period were up 2.1 percent (±0.5 percent) from the same period a year ago. The January 2024 to February 2024 percent change was revised from up 0.6 percent (±0.5 percent) to up 0.9 percent (±0.2 percent).
Retail trade sales were up 0.8 percent (±0.5 percent) from February 2024, and up 3.6 percent (±0.5 percent) above last year. Nonstore retailers were up 11.3 percent (±1.6 percent) from last year, while food services and drinking places were up 6.5 percent (±2.1 percent) from March 2023.
The chart below is a log-scale snapshot of retail sales since the early 1990s. The three 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.
- 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 blue line is a regression from the start of the series through the end of 2019 and then extrapolated to the present – thus excluding the COVID-19 pandemic.
Monthly retail sales have been above the red and blue line since March 2021, signaling increased consumer spending that was most likely pent up as a result of the pandemic.
The year-over-year percent change provides another perspective on the historical trend. Current retail sales are up 4.0% compared to March 2023. Here is the headline series with a callout to the most recent 12 months.
Core Retail Sales
Core sales (ex Autos) also exceeded expectations by increasing 1.1% in March compared to the expected 0.5% growth.
Core retail sales are up 4.3% compared to March 2023. Here is the year-over-year chart of core retail sales with a callout to the most recent 12 months.
Retail Sales: “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. Retail sales control purchases were up 1.1% in March.
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 two of the exponential regressions previously mentioned.
Here is the same series year-over-year. Current control purchases are up 5.1% compared to March 2023.
For a better sense of the reduced volatility of the “control” series, here is a YoY overlay with the headline retail sales. Note that the two series follow each other closely, but headline sales have more extreme highs and lows than the control series.
Bottom Line: Retail sales rose more than expected in March across all three series (headline, core, and control), highlighting the strength and resilience of the U.S. consumer.
Retail sales will impact interest in the SPDR S&P Retail ETF (XRT ), VanEck Retail ETF (RTH ), Amplify Online Retail ETF (IBUY ), and ProShares Online Retail ETF (ONLN ).
Originally published on Advisor Perspectives.
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