February and January have to be averaged but together they confirm strength in the consumer. Retail spending could manage only a 0.1 percent gain in February but January, which was already solid, is now revised 2 tenths higher to 0.6 percent.
A surprising point in this report is that these headline gains, though less than astonishing, were made despite weakness in the motor vehicle component which had been strong late last year and makes up about 1/5 of total retail spending. Auto sales fell 0.2 percent in February and 1.3 percent in January. Excluding autos, February retail sales rose 0.2 percent with January showing a standout 1.2 percent surge which is the strongest monthly gain in 5 years, since February 2012.
Gasoline pulled down February's results, falling 0.6 percent after rising 2.1 percent in January. When excluding both autos and gasoline, sales rose 0.2 percent vs January's very strong 1.1 percent. And control group sales, which are another core measure, inched only 0.1 percent in the month but follow an outstanding 0.8 percent gain in January, one that initially posted at 0.4 percent.
It's the January revision that is most striking and which points to an upward revision for total consumer spending in the national accounts, one that came in at only 0.2 percent in the initial January report. Yet even the two months together, retail sales, though solid, are far from the astonishingly strong readings underway in consumer confidence, a mismatch that will play out in the months ahead. Another factor to note is that January and February are the two slowest months for retail sales, which makes for an outsized effect from seasonal adjustments.
Retail sales are expected to move lower from January's moderate 0.4 percent gain with the Econoday consensus calling for only a 0.1 percent February increase. Vehicle sales are expected to pull down February slightly as the ex-auto consensus increase is at 0.2 percent vs January's outsized 0.8 percent performance. Ex-auto ex-gas sales, in a snap back from a very disappointing December, were the strength of the January report, jumping 0.7 percent with February however seen rising only 0.3 percent. Control group sales are expected to underscore a moderate showing, also at a consensus gain of 0.3 percent and down from January's 0.4 percent rise.