Retail Sales Lower In March

Retail sales, down a disappointing 0.3 percent in March, were pulled lower by auto sales but unfortunately do show wider weakness. Auto sales fell a very steep 2.1 percent in March and last posted a monthly gain way back in November. March is the biggest drop for vehicle sales since February last year. In an offset, gasoline sales, boosted by higher prices at the pump, jumped 0.9 percent. Excluding just gasoline -- which offers a very telling reading on consumer demand -- retail sales fell 0.4 percent. Excluding both autos and gasoline, sales rose 0.1 percent which is 2 tenths below expectations. A sign of the month's weakness is contraction at restaurants, a discretionary category which fell a very sharp 0.8 percent in the month. A plus is building materials which rose a very strong 1.4 percent for a second month in gains that point to extending strength for residential investment. But in sum, this report raises key questions over the health of the consumer and also over the pace of overall economic growth.

Recent History Of This Indicator:
Weakness for auto sales is expected to hold down retail sales to only a 0.1 percent gain in March. Otherwise, sales are expected to show solid strength, at plus 0.4 percent for March's ex-auto reading and plus 0.3 percent for ex-auto ex-gas. Growth for the core ex-auto ex-gas reading has been holding up well at a solid year-on-year trend of just over 4 percent vs roughly 3 percent for total sales. Price weakness for gasoline has held down sales at gasoline stations but a rebound, tied to the recovery in oil prices, is expected for March. This report will close out the first quarter for retail sales which in February and January, pulled down by weak vehicle sales, showed back-to-back declines.