Monthly retail sales growth likely not as strong as seasonally adjusted numbers suggest, but spending remains relatively solid
Monthly retail sales growth likely not as strong as seasonally adjusted numbers suggest, but spending remains relatively solid
After January's MoM drop in US retail sales was exaggerated by seasonal adjustments, March's MoM growth was likely exaggerated to the upside: though the overall trend remains fairly robust.
US retail sales growth sees another significant MoM increase, but seasonality may be a key factor
US retail trade and foods services (retail sales) growth rose 0.72% MoM, or 9.0% annualised, in March. This followed upwardly revised growth of 0.94% MoM in February, marking a strong rebound from January’s growth of -0.87% MoM.
This follows my prior analysis, whereby I showed that January’s apparently weak MoM growth was nowhere near as bad as the seasonally adjusted data portrayed.
Instead, January’s non-seasonally adjusted decline of 16.9% MoM was in-line with what was seen in January 2022 — back then, this translated to seasonally adjusted growth of 1.4% MoM.
Looking at US retail sales growth on a 3-month annualised basis, shows an increase to 3.2%, the highest growth rate since October. While 6-month annualised growth moderated slightly to 1.2% (from 1.4%), it may see a significant jump in April, as the MoM decline of 0.3% that was recorded in October, rolls out of the 6-month annualised equation.
While the strong MoM growth that has been seen over the past two months paints a strong picture of US consumption, it’s important to note that just as seasonal adjustments made US retail sales growth look overly weak in January, they appear to be making it looking overly strong in March.
This can be seen via YoY growth (using non-seasonally adjusted data) falling to 2.4% in March, down significantly from February’s YoY growth rate of 6.2%.
On a 3-month moving average basis, which helps to smooth out the volatile nature of retail sales data, YoY growth eased to 3.4%, from 3.7% in February. Though this remains above the average 3-month annualised YoY growth rate of 2.9%, that was recorded in 2H23.
