Strong auto sales drove overall retail up in March, fueling confidence for Q2.
Retail sales ticked up 0.6% in March over February, according to the U.S. Census Bureau. The results represent a 4.7% increase over March 2017.
Total retail and food service sales reached $494.6 billion in March, boosting the quarter to a 4.1% increase.
“This is a healthy spending report despite market volatility, unseasonable weather and uncertain economic policies,” said National Retail Federation chief economist Jack Kleinhenz. “Consumers continue to show resiliency in spending, and these numbers reflect how the economy is performing with a strong job market, gains in wages, improvements in confidence, rising home value and judicious use of credit. The biggest risk to spending is in market fluctuations that could affect confidence, but we expect these basic improvements in economic fundamentals to continue.”
While general merchandise sales increased 0.3% over February to $58.3 billion, department store sales only reached $12.5 billion, a 0.3% decline from the prior month and a 0.9% decline from March 2017. Clothing and accessories stores totaled $21 billion, which represented a 0.8% drop in sales from February. However, sales at these retailers were up 1.8% over last March.
The auto sector saw the biggest increase at 2 percent over February, while the catchall sporting goods, hobby, book and music store category declined 1.8% from the prior month.
IHS Markit attributes the positive performance to consumer spending boosted by tax refunds and bonuses associated with tax reform. The uptick in restaurants (0.4%) and grocery stores (0.2%) were just enough to offset the negative effects of a cold, stormy March, said Kathleen Navin, director of macroeconomic advisers at IHS.
Non-store sales, which are primarily comprised of online transactions, hit $50.6 billion, a 0.8% boost over last month and a 9.7% increase over the prior year.
“Nonstore retailer sales (mostly online) had a second straight strong month and are continuing to outpace department stores (which were down 0.3%). Nonstore sales growth has outpaced that of department stores for four of the past five months,” Navin added.