US retail sales contracted by 0.6% m/m in Feb. Motor vehicle sales fell by 2.5% m/m and building materials sales fell by 2.3% m/m. In contrast, the value of sales at gasoline stations rebounded by 1.5% m/m, mirroring the modest recovery in gasoline prices.
Excluding vehicles, building materials and gasoline, so-called control group retail sales were unchanged in February, following a 0.1% m/m decline in January.
The only good news is that the figures now show a 0.2% m/m increase in December, which was revised up from a small decline in previous estimates.
Capital Economics notes in a report on Thursday:
- For the second year in a row, the unseasonably severe winter weather appears to have hit retail sales. As a result, we now anticipate that first-quarter GDP growth will be a more modest 2.0% annualised.
- Nevertheless, this doesn't change our view that the real economic recovery is strengthening and we still expect the Fed to begin hiking interest rates in June.