February retail sales see a slight step back but remain pointed in the right direction

United States retail sales, for the month of February saw sequential declines and annual gains, according to data issues today by the United States Department of Commerce’s U.S. Census Bureau and the National Retail Federation (NRF).  

Commerce reported that February retail sales—at $561.7 billion—fell 3.0%, from January to February, following a 5.3% gain, from December to January, while seeing a 7.6% annual increase. And it also observed that total retail sales, from December 2020 through February 2021, saw a 6.0% annual increase compared to the same period a year ago.

February retail trade sales were off 3.1% compared to January, while seeing a 9.5% annual increase. Non-store retail sales—which includes e-commerce activity—continued its strong run, with a 25.9% annual gain, which was in line with January’s 28.7% annual increase, while food services and drinking places slipped 17.0% annually.

NRF data: The NRF reported that the annual gains in February saw solid growth despite following January’s results, which it called “unusually high,” with an uptick in COVID-19 vaccinations, federal stimulus and reduced restrictions on business remaining prevalent in the pace of retail sales spend.

The organization reported that its calculation of February retail sales, which excludes automobile dealers, gasoline stations, and restaurants, pointed to a 3.4% seasonally-adjusted decrease, from January, and a 7.1% unadjusted annual gain, which were down, respectively, compared to January’s 7.7% sequential increase and 12.7% annual gain. On a three-month moving average, through February, NRF reported that retail sales rose 8.9% annually on an unadjusted basis.

Some of the key retail sales sector data for February cited by the NRF included:

• Online and other non-store sales were up 11% month-over-month seasonally adjusted and up 22.1% unadjusted year-over-year;
• Sporting goods stores were down 7.5% month-over-month seasonally adjusted and up 11% unadjusted year-over-year;
• Building materials and garden supply stores were down 3% month-over-month seasonally adjusted and up 11.4% unadjusted year-over-year;
• Grocery and beverage stores were flat month-over-month seasonally adjusted and up 7.2% unadjusted year-over-year; and
• Furniture and home furnishings stores were down 3.8% month-over-month seasonally adjusted and up 5.1% unadjusted year-over-year

“After January’s strong showing, we expected some payback in the form of lower figures in February by comparison,” NRF Chief Economist Jack Kleinhenz said in a statement. “Despite that, it’s hard to see this as a setback when you consider how large the year-over-year gains are and that sales are well above pre-pandemic levels. February had winter storms that impacted consumers’ ability to get out and shop, and the IRS’ delay in when it started accepting tax returns pushed back the release of refunds. But increased vaccinations and reductions in restrictions allowed more people to venture out and government stimulus gave them more money to spend. Overall, February’s results confirm that consumers are willing to spend as the virus situation improves and continued government stimulus further strengthens the economic backdrop. With another round of stimulus checks being mailed right now, we expect another large boost in consumer spending over the next few months.”

The comments made by Kleinhenz match up well with the NRF’s recent 2021 retail sales forecast, which is calling for an annual increase between 6.5% and 8.2%, for a total between $4.33 trillion and $4.40 trillion. Looking back at 2020, NRF observed that total retail sales, for the year, headed up 6.6%, amid the myriad challenges presented by the pandemic, while topping the previous annual percentage gain, of 6.3%, from 2004.

NRF said that these figures come with the prospects of economic improvement spurred on by more people receiving COVID-19 vaccinations, coupled with the continuing re-opening of the economy. 

In late February, NRF President and CEO Matthew Shay said that NRF is optimistic that healthy consumer fundamentals, pent-up demand, and widespread vaccine distribution will collectively contribute to generate increased economic growth in 2021.

And he noted that the NRF and its members have had a number of conversations with White House representatives that are leading the COVID-19 task force offering NRF members expertise, with a focus on logistics, distribution, and demand forecasting, which he described as very productive and will continue.

“Those conversations will continue, and you will see them continue in a visible over the coming weeks and months,” said Shay. “Despite the challenges of the last year, we continue to be optimistic that in the aggregate overall macroeconomic conditions are very healthy and will continue to improve as we seen those numbers and lines go in different directions and see increasing numbers of vaccines distributed and administered and we see decreases in infection rates and containing the Coronavirus and diminishing the daily infection rate and keeping people safe and healthy.”  

Shay also observed that the NRF’s forecast is largely based on solid economic fundamentals and consumer strength, in addition to the vaccines. What’s more, he said that NRF is optimistic that the economy will experience its fastest growth in more than two decades, adding that the NRF’s forecast is a snapshot based on the current economic environment, with some uncertainty in various areas but overall NRF maintains the trajectory of the economy is very solid, with the expectation of robust growth, as the vaccine continues to be distributed over the course of the next year.