By Urvashi Verma
Sales at U.S. retail and food stores rose 0.1 percent in February, due in part to income tax refund delays that caused a slight consumer pullback, economists said.
The seasonally adjusted sales of retail and food services increased 0.1 percent in February to $474 billion, compared with January’s upwardly revised gain of 0.6 percent, according to data collected by the U.S. Census Bureau.
Sales were on target, matching the 0.1 percent consensus estimate compiled by Bloomberg.
“While those numbers don’t seem like much, they are better than we had expected, and also come in the context of significant upward revisions to prior estimates of January retail sales,” said Richard Moody, chief economist at Regions Financial Corp., in an email.
Delays in income tax refund payments from the federal government dampened retail sales numbers in February, but some economists expect spending to pick up next month.
“The reason our expectations were so low for February sales is delays in processing tax refunds/credits meant many households were faced with a cash crunch in February, and there are anecdotal reports from various retail and restaurant chains of sluggish sales,” said Moody.
Sales at restaurants and bars fell 0.1 percent in February after rising 1.7 percent in January.
“By late February, however, those funds had largely been distributed, which means any shortfall in spending in February will be made up for in March,” Moody said.
Sales at electronics and appliance stores fell 2.8 percent last month, the biggest segment decline, followed by department stores, with a 1.1 percent decline.
The biggest sales gains were in building materials, garden and supplies, with a 1.8 percent increase, and non-store retailers, which rose 1.2 percent.
The motor vehicle component, which accounts for one-fifth of consumer spending, fell 0.2 percent in February after declining 1.3 percent in January. Gasoline sales decreased 0.6 percent after increasing 2.1 percent in the month prior.
Excluding both autos and gasoline, sales rose 0.2 percent, compared with January’s 1.1 percent increase.
“Although the gain in sales in February was not very broad-based – only four of thirteen major categories showed growth – it came despite a delay in tax refunds this year,” said Brian Wesbury chief economist at First Trust Advisor, in his research note. “As a result, expect stronger numbers in the months ahead as these delayed tax refunds come in,” he added.
Compared with a year ago, seasonally adjusted sales increased 5.7 percent. The largest gains from the year-ago-period were in gasoline stations sales which increased 19.6 percent followed by non-store retailers which rose 13.0 percent.
